What is Export Factoring? | Tfc Trade Finance
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What is Export Factoring?

What is Export Factoring?


Export factoring is a service whereby the exporter transfers copies of the invoices on foreign importers, and sells its receivables to a factoring company with a facility fee, based on the face value of invoices. As a result, exporter does not have to wait 30 – 90 days or longer for its invoices to be paid. In other words, export factoring helps an exporter speed up its cash flow.
The factoring company undertakes all credit control and collection. In general, there are two faces of export factoring

Non Recourse Export Factoring

With non recourse export factoring, the risk of insolvency and non-payment is completely transferred to the factoring company. If the importer bankrupts or does not pay the invoice , the factoring company does not back to the exporter for payment due to the payment guarantee of the Credit Insurance Company.

Recourse Export Factoring

In case, an importer does not pay the invoice, the export factoring company comes back to the exporter for payment. The insolvency and non payment risks are on the export company.

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