Essay about Factoring

9726 Words Nov 6th, 2015 39 Pages
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|INDEX |
|CHAPTER No. |Particulars |Page no. |
|1. |Introduction, meaning & defination. |3 |
|2. |Modus operandi, terms and condition |4-6 |
|3. |Function, types, beneifits of factoring |7-10 |
…show more content…
Financial institution tries to extend their financial assistance to a larger cross-section of the trading community through book debt financing. A kind of book debt financing is already practice in India by the commercial bank. It is nothing but bill financing. This type of financing is done either by way of direct purchase of bills of customers or discounting them.

CHAPTER 1: INTRODUCTIION, MEANING & DEFINATION

1.1 INTRODUCTIION As stated earlier, a lot of working capital is tied up in the form of trade debts. Collection of debts, especially for the small scale and medium scale companies is the biggest problem. The average collection period has been on the increase. Delays in collection process inturn lead to liquidity problems and consequently to delay in production and suppliers. The peculiar situation in India is that a number of small scale units are catering to the requirement of single large buyer. This large buyer is always known as procrastination in paying his small suppliers. The crux of the problem is not so much the failure to pay on time. As a result, the interest cost of financing book debts in quite heavy. This increases particularly the small one in the market. Ultimately, the small unit may become even sick. To overcome this situation, the factoring service has been conceived.

1.2MEANING

The word

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