SNI CAPITAL ADVISORS Non-Resource Factoring Presentation
Introduction to SNI Capital Advisors SNI Capital is a leading financial/business consulting firm having a strong global presence directly or indirectly through its network partners & associates. Professionally managed organization comprising of highly experienced and dynamic professionals from the fields of Finance, Law, and Business Administration such as Chartered Accountants, Lawyers, Company Secretaries and MBAs etc. At SNI, we specialize in providing structured financing solutions that enable the growth of small/mid-cap companies to grow efficiently by improving the liquidity and reducing cost of funds. Our solutions also assist large corporations to enhance their growth strategies not only by increasing liquidity, but also via restructuring of debt and equity.
Origin Of Factoring Came into existance in the year 1920 It was not an organised sector that time Association of British Factors(ABF) came in 1976 Nearly 90% of global factoring turnover comes from USA & Europian countries RBI appointed the C.S.Kalyanasundaram Committee (1988) It suggested to start factoring by a bank through its subsidiary
What is Factoring? Factoring is a financial service provided by specialized agents to help exporters and traders etc. to manage their receivables. It is a process of selling receivables to a third party on a discount. The supplier (exporter) assigns his accounts receivables in favour of the factor and gives notice of assignment to the debtor. The factors undertake collection/accounting and management of debts of their clients. Factor may either lend against accounts receivables or by purchasing invoices. The factoring service may be offered with or without recourse.
Why use Factoring? Through the use of Factoring receivables are instantly converted into cash leading to improved cash flows that can help funding of future growth. It facilitates an efficient follow up of payments from buyers, which is made possible through relationships developed by factors with client’s buyers. Factoring provides credit protection for export sales which enables to do business with buyers who are unwilling to open Letters of Credit. Factoring also provides other peripheral services such as advisory services, credit assessment, etc.
Benefits to an Exporter Option to give easier credit terms to customers - Better protection without the need to insist on establishing a Letter of Credit; Can offer more friendly delivery terms like, direct delivery to the customer (as against DP/DA) without any risk; Reduced foreign bank handling charges on documents; Substantial cost savings on monitoring and follow up (telephones, faxes, follow-up visits) of receivables, overdue bank interest on delayed collections and recovery expenses relating to bad debts; Increase export sales by being able to offer more competitive terms to customers; Better security than Letters of Credit; Elimination of uncertainties relating to realization of accounts receivables resulting in better cash management to meet working capital requirements; Complete freedom from monitoring and follow up of receivables and bad debt recovery blues; With complete freedom from chasing receivables, can devote full attention to procurement/ production, marketing and sales and growth of business.
Functions The functions or ingredients of full factoring services are::: Financing by way of pre payment of the receivables; Sales Ledger Maintenance Collection of receivables Recovery of bad debts and Credit Protection against bad debts
Pricing The pricing of various services by factors will depend on various aspects such as credit worthiness of the customer, his track record, quality of portfolio, turnover, average size of invoices etc.
Factoring is not suitable under following cases:- a) Where large volume of cash sales take place. b) Engaged in speculative business. c) Selling highly specialized capital equipments or made-to-order goods. d) Where credit period offered to the buyers is more than 120 days. e) Where there is Consignment Sale or 'Sale or Return Arrangements'. f) Where sales are to the sister / associated companies . g) Where sales are to the public at large, etc.
SNI CAPITAL ITAL ADVISORS ISORS 4805/24, Bharat Ram Road, Darya Ganj, New Delhi-110002, (India) Tel: +91-11-4352 8764 E-mail:
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