Single Factoring System:
- Under this system, a special agreement is signed between two factoring companies in the exporting & importing countries to the effect that only on factoring agency would perform all the functions.
- If the export factor is not in a position to realize the dues even after 60 days of the due date than he requests the import factor to undertake the collection responsibility
- Simultaneously, the export factor informs the debtor about the assignment for collection is given to the Import factor.
- The Import factor under his power can initiate the legal proceedings.
- In case the dues still remain outstanding, then the import factor has to bear the loss.
- The pricing under this system is much lower compared to the two-factor system
- In this system, the import factor does not maintain any books of the exporter but acts on the information from the export factor.
Direct Export Factoring:
- Under this system, only one factoring company is involved i.e. export factor
- It provides all the elements of service of factoring, namely finance to exporters, maintenance of sales ledger & collection of debts from the importers, credit protection in case of financial inability on part of any importes.
- This type of factoring is less expensive & quick.
Direct Import Factoring:
- Under this system, the seller will directly work with the import factor in the importer’s country.
- The import factor is responsible for sales ledger, adminstration, collection of debt & provide bad debt protection to the exporter.
- The main disadvantage of the system is the lack of proximity between the exporter & the import factor.