Two-Factor Export Factoring

Two-Factor Export Factoring refers to an agreement whereby the exporter (our customer), under documentary collection against acceptance or open account, assigns accounts receivable generated under sales contract to CEXIM (the export Factor), and then to a foreign import factor. CEXIM and the foreign import factor will provide you with a series of services including credit assessment, collection of receivables, receivables ledgering, protection against bad debts and export trade finance. 

Our Service: Two-Factor Export Factoring can be “with recourse” or “without recourse”. 

Benefits for Exporters 

Enhancing Export Competitiveness:  The exporter is able to provide its existing or new customers with more competitive payment terms such as open account and documentary collection against acceptance, thus expanding overseas market and increasing business opportunities;  

Protection against Risks: Factors undertake the importer's credit risk, therefore the exporter can be secured for all the foreign exchange earnings; 

Saving Administration Cost:  Factors take over credit assessment, sales ledger administration and collection of receivables, alleviating the exporter’s workload and leading to a saving on staff and time; 

Simple Formalities: Formalities of two-factor export factoring are simpler and easier than that of documentary credit; 

Providing Finance Facilities:  Accounts receivable discounting could relieve the problem of the exporter's working capital tied up in accounts receivable, and accelerate the exporter’s cash flow; 

Avoiding Exchange Exposure, Optimizing Financial Structure: Factors buy out accounts receivable so that the exporter is able to fix foreign exchanges in advance, avoid exchange risk and improve financial statements. 

When Do You Choose Two-Factor Export Factoring? 

The exporter and the importer maintain a long-time business relationship under open account transactions which often occur in high volume and high frequency; 

Despite the desire to expand overseas business, the exporter wishes to reduce the risk due to its doubts about potential customers' credit standing and financial condition; 

The foreign importer is unwilling or unable to issue a documentary credit, limiting the enlargement of export scale and the increase of export volume; 

The foreign importer tends to cooperate with other suppliers due to the exporter’s unwillingness to settle in deferred payment; 

The exporter wishes to remove the burdens of accounts receivable administration and collection. 

Tips  

The importer factor is only liable for the importer’s financial risk (insolvency or payment crisis), and is not responsible for the importer’s dishonor resulted from the exporter’s default; 

Generally, under two-factor export factoring, finance will be provided for as much as 80% of the approved outstanding accounts receivable and credit period is no longer than 180 days.