Bill Discounting. Exporter. Importer BANKING AND TRADE FINANCE TUTORIAL. Importer s Bank. Exporters Bank INDIA FOREX ADVISORS.

Size: px
Start display at page:

Download "Bill Discounting. Exporter. Importer BANKING AND TRADE FINANCE TUTORIAL. Importer s Bank. Exporters Bank INDIA FOREX ADVISORS."

Transcription

1 Bill Discounting While discounting a bill, the Bank purchases the bill receivable to the Exporter (i.e. Bill of Exchange or Promissory Note) before its due date and credits the value of the bill to the exporters account after deducting a discount. The transaction is practically an advance against the security of the bill and the discount represents the interest charged on the advance given, which is payable from the date of purchase of the bill until it is due for payment. Exporter Importer 1. Enters into agreement 4.Applies for Discount 5. Receives the Net Payment 2. Submits Documents 6.Presents the Documents 7. Payment due Exporters Bank 3. Accepts the Documents Importer s Bank 8. Pays the amount due How it works: The Exporter and the exporter s bank first enter into an agreement which outlines the terms and conditions for availing the facility of Bill Discounting. The Exporter then submits the documents to his bank, which will be sent to the importer's bank for acceptance. The Importer's bank then sends a notification to the Exporter s bank intimating it once the bill has been accepted.

2 Upon receipt of the accepted bill the Exporter then applies to his bank to discount the bill. Once the application is received the bank then processes the application and sanctions the amount deducting a portion of the face value of the bill as a discount. The Discount amount depends upon the period of time left until the due date of the bill. The Importer on the due date then makes the payment to the exporter s bank, which will be used to offset the advance given in lieu of the bill receivable. Benefits: Discounting of bills provides the exporter with a short term source of finance to fund his working capital needs. Bills discounting being categorized as a transaction, falls outside the ambit of Section 370 of the Indian companies Act 1956, which places a restraint on the quantum of loans that can be given by group companies Since it is a form of lending, no tax at source is deducted while making the payment, this makes it very convenient to the exporter not only from the cash flow point of view, but also from the perspective of companies that do not factor in tax costs. The rates of discount charged while discounting a bill are lower than those charged while availing ICDs (Inter Corporate Deposits) Bill discounting provides the exporter flexibility not only on the quantum of funds, but also on the duration. Factoring Factoring is a service which involves the purchase of trade receivables which a customer owes to a manufacturer or distributor by a financial organization, called a factor, with the factor assuming the entire responsibility of credit and collection. It is a process wherein the Factor pays the exporter in advance against the credit invoices that the exporter regularly raises on his established clients. In settlement of this obligation, the importer pays the Factor on the respective due dates directly.

3 Exporter 1.Sales contract/purchase Order 2.Shipment/ Invoicing Importer 7.Balance Payment 6.Payment 4.Pre- Payment 3.Assignment of Invoice Factor 5.Collection How it works: The exporter has to first deliver the goods or services to his client and raise an invoice against the importer. On an on-going basis, all the invoices which have been raised against a pre-agreed buyer, along with supporting trade documents are then assigned to the factor. The Factor then provides the exporter with an advance(upto 80%), in some cases as early as the next business day upon receipt of such documents (subject to the documents being in order). On payment of the respective invoice by the importer to the Factor, the balance amount (if any) is then credited to the exporter's account.

4 Benefits: The exporter gains from predictable cash flows which are linked directly to his performed sales. The exporter can easily convert credit receivables to cash, as the Factor will normally provide a prepayment immediately upon receipt of documents. The funding normally happens in a short duration from the receipt of documents, this enbales the exporter to plan and manage his cash flow more effectively. The Factor can also provide the exporter with a credit assessment of customers both new or existing. Factoring companies also tend to provide additional services such as accounts receivable, reporting, sales ledger administration and debtor follow-up. Factoring ensures that no additional debt is created on exporters balance sheet as it is an advance given to the exporter on behalf of an asset. The outsourcing of trade receivables collections processes can allow the exporter to focus on his core business activities. Forfaiting Forfaiting is a form of service which involves the purchase of credit instruments such as avalised bills of exchange, letters of credit, promissory note or other freely negotiable instrument from the exporter on a non-recourse basis i.e. the forfaiting company will not recover the amount from the exporter if the buyer defaults. These transactions are normally supported by the buyer s bank and hence the risk of payment default is primarily carried by the bank or financial institution. The forfeiter then deducts interest (in form of discount) and pays the balance to the exporter on a nonrecourse basis. How it works : The Exporter ships the goods or provides the service as per the terms of the contract and then submits the necessary documentation to the forfaiting company or the forfaiting company s bankers. Trade documents are transmitted to the importer s bank for acceptance and assignment of proceeds to the Forfaiting company. On receipt of such confirmation, the forfaiting company pays the discounted proceeds to the exporter on a non-recourse basis. The forfeiting company then assumes the risk of payment by the importer's bank.

5 Benefits : Forfaiting helps the exporter by providing 100% financing without any recourse to the seller. Forfaiting helps eliminate the risks associated with carrying out trade as the entire risk of default, currency and interest rates are transferred from the exporter to the forfeiting company. Forfaiting helps the exporter to improve his cash flows by providing liquidity against transactional documents. Forfaiting helps improve the exporters balance sheet as it removes accounts receivables, bank loans or any other contingent liabilities.

6 For further query, please contact our below mentioned analysts: Name Anita Joshi Alisha Bajaj Aditi Aggarwal Id Disclaimer These views/ forecasts All are Interbank rates and do not include bank margins INDIA FOREX ADVISORS PVT LTD The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of India Forex Advisors Pvt Ltd. These views/ forecasts/ suggestions, though proffered with the best of intentions, are based on India Forex reading of the market at the time of writing. They are subject to change without notice. Though the information sources are believed to be reliable, the information is not guaranteed for accuracy. Those acting in the market on the basis of these are themselves responsible for any profits or losses that might occur, without recourse to us. World financial markets, and especially the Foreign Exchange markets, are inherently risky and it is assumed that those who trade these markets are fully aware of the risk of real loss involved.

www.indiaforex.in REER NEER India Forex Advisors IFA Classroom: Understanding NEER and REER Dated- 14 th August, 2014

www.indiaforex.in REER NEER India Forex Advisors IFA Classroom: Understanding NEER and REER Dated- 14 th August, 2014 The exchange rate is the weighted average value of a country's currency relative to all major currencies being traded within an index or pool of currencies. There are two exchange rate regimes: NEER (Nominal

More information

Factoring and Forfaiting

Factoring and Forfaiting Factoring and Forfaiting -A fund/fee based financial service Prof. Nishant Dhruv, What is Factoring? Definition: Factoring provides resources to finance receivables as well as facilitates the collection

More information

Optimizing Payment Cycles for Trade Payables and Receivables

Optimizing Payment Cycles for Trade Payables and Receivables Optimizing Payment Cycles for Trade Payables and Receivables Houston Treasury Management Association Space City Cash Conference September 2013 Madeline Sprague, HSBC Bank USA, N.A. Global Trade & Receivables

More information

To enable highly rated corporate borrowers to diversify their sources of short term borrowings.

To enable highly rated corporate borrowers to diversify their sources of short term borrowings. COMMERCIAL PAPER (CP) CP is an unsecured money market instrument issued in the form of a Promissory Note and was introduced in 1990. Can now be issued in Dematerialised form. To enable highly rated corporate

More information

Factoring and forfaiting. International financial settlements 120881-1165

Factoring and forfaiting. International financial settlements 120881-1165 Factoring and forfaiting 1 Factoring Factoring is a transaction where the exporter sells its receivables to an institution The factoring institution buys the receivables without recourse Due to increased

More information

LESSON 13: FACTORING THEORETICAL FRAMEWORK

LESSON 13: FACTORING THEORETICAL FRAMEWORK LESSON 13: FACTORING THEORETICAL FRAMEWORK Lesson Objectives To understand the Concept of Factoring. Methodology of Factoring and Forfeiting. Types of factoring. Introduction Receivables constitute a significant

More information

salesinvoices@leaseinvestment.com www.leaseinvestment.com Tel: +44871 237 4770 Fax: +44701 423 7002

salesinvoices@leaseinvestment.com www.leaseinvestment.com Tel: +44871 237 4770 Fax: +44701 423 7002 INVOICE DISCOUNTING, FACTORING & SALES LEDGER MANAGEMENT Selling your sales Invoices or outsourcing your sales ledger is one of the most complex techniques for business finance. Unfortunately, it is often

More information

BANKING UNIT POLICY DOCUMENTS

BANKING UNIT POLICY DOCUMENTS BANKING UNIT POLICY DOCUMENTS POLICY DOCUMENT ON THE REGULATORY PROVISIONS FOR THE UNDERTAKING OF LENDING ACTIVITIES BY INSTITUTIONS AUTHORISED UNDER THE FINANCIAL INSTITUTIONS ACT 1994 FACTORING FORFAITING

More information

18 BUSINESS ACCOUNTING STANDARD FINANCIAL ASSETS AND FINANCIAL LIABILITIES I. GENERAL PROVISIONS

18 BUSINESS ACCOUNTING STANDARD FINANCIAL ASSETS AND FINANCIAL LIABILITIES I. GENERAL PROVISIONS APPROVED by Resolution No. 11 of 27 October 2004 of the Standards Board of the Public Establishment the Institute of Accounting of the Republic of Lithuania 18 BUSINESS ACCOUNTING STANDARD FINANCIAL ASSETS

More information

Management of Receivables

Management of Receivables Management of Receivables Different costs involved in maintaining the debtors: 1. Interest. 2. Discount. 3. Collection Charges. 4. Bad Debts. Different approaches of calculating Interest: Total Cost approach.(priority)

More information

BOOKKEEPING SYSTEMS INTRODUCTION TO FACTORING. Paper 002-038 CONTENTS

BOOKKEEPING SYSTEMS INTRODUCTION TO FACTORING. Paper 002-038 CONTENTS BOOKKEEPING SYSTEMS INTRODUCTION TO FACTORING CONTENTS Page 1. What Is Factoring?... 2 2. Factoring Overview... 2 3. How Does Factoring Work?... 2 4. Alternative Method Of Factoring... 3 5. Benefits Of

More information

FORFAITING A USER'S GUIDE WHAT IT IS, WHO USES IT AND WHY?

FORFAITING A USER'S GUIDE WHAT IT IS, WHO USES IT AND WHY? FORFAITING A USER'S GUIDE WHAT IT IS, WHO USES IT AND WHY? By: John F Moran, Jr. Abstract Italian and West German exporters have long been familiar with Forfaiting and still provide the bulk of the market.

More information

FACTORING IMPROVE YOUR CASH FLOW & SECURE YOUR DEBTS. Presented by Gregory Bernardi

FACTORING IMPROVE YOUR CASH FLOW & SECURE YOUR DEBTS. Presented by Gregory Bernardi FACTORING IMPROVE YOUR CASH FLOW & SECURE YOUR DEBTS Presented by Gregory Bernardi FACTORING AGENDA What is factoring? How does it Work? Who can use factoring? Advantages/Benefits How much does it cost?

More information

Concept Paper Factoring

Concept Paper Factoring Concept Paper Factoring Co-create. Innovate. Win. 2 1.0 INTRODUCTION 3 1.1. Trade transaction 3 1.2. Discounting Vs. Factoring 4 2. 0 FACTORING 4 2.1. Parties in Factoring 4 2.2. The Factoring Process

More information

Article Accounting Terminology

Article Accounting Terminology Article Accounting Terminology Contents Page 1. Accounting Period... 4 2. Accounts Payable (Sundry Creditors)... 4 3. Accounts Receivable (Sundry Debtors)... 4 4. Assets... 4 5. Benchmarks... 4 6. B.O.S.

More information

Corporate and Investment Banking. Open Account Trade Finance Solutions

Corporate and Investment Banking. Open Account Trade Finance Solutions Corporate and Investment Banking Open Account Trade Finance Solutions Open Account Trade Finance Solutions Standard Bank your trade partner in, for and across Africa Open Account Trade Finance Solutions

More information

International Sales Finance Solutions

International Sales Finance Solutions International Sales Finance Solutions Global Transaction Services Cash Management Trade Services and Finance Securities Services Fund Services International Sales Finance Solutions Financing Tools to Support

More information

First column=preferred terms. Bold and italics signifies other defined terms. Bold signifies alternate terms used.

First column=preferred terms. Bold and italics signifies other defined terms. Bold signifies alternate terms used. First column=preferred terms. Bold and italics signifies other defined terms. Bold signifies alternate terms used. 1= Governance; 2=Facilities and Products; 3 Charges; 4 Legal terms and security arrangements;

More information

FORFAITING. A useful tool in Trade Finance

FORFAITING. A useful tool in Trade Finance 1. What is Forfaiting? 2. Which instruments are eligible for forfaiting? 3. Why does the Exporter like the forfaiting tool? 4. What is the advantage for the Importer? 5. Any advantage for the Importers

More information

Click to edit. style. Tom Tsaganos Speaker VP, Commercial Bank Foreign Exchange. Lisa Spano Speaker VP, Treasury Services, Trade Finance and Logistics

Click to edit. style. Tom Tsaganos Speaker VP, Commercial Bank Foreign Exchange. Lisa Spano Speaker VP, Treasury Services, Trade Finance and Logistics Sept / Oct 2007 T R E A S U R Y & S E C U R I T I E S S E R V I C E S Click to edit Solutions to Help You Execute: A Discussion Master with title Experts in Foreign Exchange and Trade style Charles Darwall

More information

FORFAITING IMPROVE YOUR CASH FLOW & MITIGATE RISK - WHILE OFFERING YOUR CUSTOMERS EXTENDED PAYMENT TERMS

FORFAITING IMPROVE YOUR CASH FLOW & MITIGATE RISK - WHILE OFFERING YOUR CUSTOMERS EXTENDED PAYMENT TERMS Financing International Sales using Forfaiting Presented by Gregory Bernardi LFA FORFAITING IMPROVE YOUR CASH FLOW & MITIGATE RISK - WHILE OFFERING YOUR CUSTOMERS EXTENDED PAYMENT TERMS 1 FORFAITING AGENDA

More information

128 SU 3: Financial Accounting I

128 SU 3: Financial Accounting I 128 SU 3: Financial Accounting I 3.5 FINANCIAL ASSETS AND LIABILITIES Definitions 1. Financial assets include cash, equity instruments of other entities (e.g., preference shares), contract rights to receive

More information

MANAGING CREDIT RISK IN A VOLATILE MARKETPLACE

MANAGING CREDIT RISK IN A VOLATILE MARKETPLACE Export Forum 2015 October 14, 2015 MANAGING CREDIT RISK IN A VOLATILE MARKETPLACE Presented by: George Babeu, President One Source Risk Management and Funding, Inc. WHAT WE WILL DISCUSS Today s volatile

More information

Cash Flow Finance. Factoring / Invoice Discounting

Cash Flow Finance. Factoring / Invoice Discounting Cash Flow Finance Factoring / Invoice Discounting definition: n (Business / Commerce) A method of obtaining finance from a third party lender on services or goods already delivered and invoiced, but not

More information

Actuarial Society of India

Actuarial Society of India Actuarial Society of India EXAMINATIONS November 2004 SUBJECT - 108: Finance and Financial Reporting Indicative Solution S-108 Page 1 of 7 1 D 2 C 3 B 4 D 5 D 6 A 7 B 8 C 9 B 10 D 11 Trade credit is short-term

More information

Forex Risk Management: Ways for Succeeding in Turbulent Economic Times Dr.Akansha Jain MBA department Dronacharya Group of Institutions, Greater Noida

Forex Risk Management: Ways for Succeeding in Turbulent Economic Times Dr.Akansha Jain MBA department Dronacharya Group of Institutions, Greater Noida Forex Risk Management: Ways for Succeeding in Turbulent Economic Times Dr.Akansha Jain MBA department Dronacharya Group of Institutions, Greater Noida Abstract-Globalisation of financial markets and developments

More information

Pivotal Issues When Managing. Chapter 7. Cash and Receivables. Skyline College Lecture Notes. Cash Considerations. Cash Requirements.

Pivotal Issues When Managing. Chapter 7. Cash and Receivables. Skyline College Lecture Notes. Cash Considerations. Cash Requirements. Chapter 7 Cash and Receivables Skyline College Lecture Notes Pivotal Issues When Managing Cash and Receivables 1. Cash needs 2. Credit policies 3. Level of accounts receivable 4. Financing receivables

More information

ISO20022 Trade Services Dashboard Description of business processes. ISO20022 - Trade Services Description of Business Processes

ISO20022 Trade Services Dashboard Description of business processes. ISO20022 - Trade Services Description of Business Processes ISO20022 Trade Services Dashboard Description of business processes 1 Trade Services Description of Procurement: Sub-Functions Tendering Ordering Delivering Invoicing Process for buyer to contact potential

More information

½ a mark for rounding up (6 marks) (b) There are a number of costs to the business associated with holding inventory:

½ a mark for rounding up (6 marks) (b) There are a number of costs to the business associated with holding inventory: EDI LCCI IQ ON DEMAND AWARD IN BUSINESS FINANCE AND BANKING OPERATIONS SAMPLE LEVEL 4 MARKING SCHEME DISTINCTION MARK 75% CREDIT MARK 60% PASS MARK 50% TOTAL 100 MARKS QUESTION 1 (a) Inventory days Receivable

More information

Xynergy Commercial Capital LLC

Xynergy Commercial Capital LLC Xynergy Commercial Capital LLC How Can Work For You The Problem Short of cash and must pay suppliers, lease, bills and salaries? No need for stress, get your payments in advance for your invoices and pay

More information

CHAPTER 20 INTERNATIONAL TRADE FINANCE SUGGESTED ANSWERS AND SOLUTIONS TO END-OF-CHAPTER QUESTIONS AND PROBLEMS

CHAPTER 20 INTERNATIONAL TRADE FINANCE SUGGESTED ANSWERS AND SOLUTIONS TO END-OF-CHAPTER QUESTIONS AND PROBLEMS CHAPTER 20 INTERNATIONAL TRADE FINANCE SUGGESTED ANSWERS AND SOLUTIONS TO END-OF-CHAPTER QUESTIONS AND PROBLEMS QUESTIONS 1. Discuss some of the reasons why international trade is more difficult and risky

More information

Discounting. Factoring & Forfeiting Summary

Discounting. Factoring & Forfeiting Summary Chapter 7 Discounting. Factoring & Forfeiting Summary The financial service sector is developing at rapid pace in India. This is just because of the emerging needs of the economy. Many innovative schemes

More information

Short-term investments (also known as marketable securities) are easily convertible to cash that a company plans to hold for a year or less.

Short-term investments (also known as marketable securities) are easily convertible to cash that a company plans to hold for a year or less. Accounting Fundamentals Lesson 5 5.0 Receivables & Investments Short-term investments (also known as marketable securities) are easily convertible to cash that a company plans to hold for a year or less.

More information

Flashcards for Chapter 6 Introduction to Working Capital Management [ ]

Flashcards for Chapter 6 Introduction to Working Capital Management [ ] Flashcards for Chapter 6 Introduction to Working Capital Management [ ] [Type the abstract of the document here. The abstract is typically a short summary of the contents of the document. Type the abstract

More information

International Finance Prof. A. K. Misra Department of Management Indian Institute of Technology, Kharagpur

International Finance Prof. A. K. Misra Department of Management Indian Institute of Technology, Kharagpur International Finance Prof. A. K. Misra Department of Management Indian Institute of Technology, Kharagpur Lecture - 16 Transaction Exposure Management Good morning. Let us move to the session 16, where

More information

THE WORKING CAPITAL CYCLE IN INTERNATIONAL TRADE

THE WORKING CAPITAL CYCLE IN INTERNATIONAL TRADE THE WORKING CAPITAL CYCLE IN INTERNATIONAL TRADE Introduction The working capital cycle is the period of time which elapses between the points at which cash is used in the supply/production process, to

More information

Accounts Receivable and Inventory Financing

Accounts Receivable and Inventory Financing Accounts Receivable and Inventory Financing Glossary Accounts Payable - A current liability representing the amount owed by an individual or a business to a creditor for merchandise or services purchased

More information

Supply Chain Finance. 16 June 2009 Brussels

Supply Chain Finance. 16 June 2009 Brussels Supply Chain Finance 16 June 2009 Brussels 2 Avarina Miller Senior Vice President Demica Ltd, London 3 About Demica UK based specialist in working capital solutions with current focus on trade receivables

More information

Simply put, factoring is a transaction where a company sells its invoices at a discount in exchange for quick funds.

Simply put, factoring is a transaction where a company sells its invoices at a discount in exchange for quick funds. Imagine your growing business just made a six-figure sale to a company across the country. The problem? The buyer has 60 days to pay, but your cash flow is limited, meaning you can t afford the immediate

More information

Bookkeeping Proficiency

Bookkeeping Proficiency Bookkeeping Proficiency (Exam) Your AccountingCoach PRO membership includes lifetime access to all of our materials. Take a quick tour by visiting www.accountingcoach.com/quicktour. Table of Contents (click

More information

Want to start or grow your import/export business? Learn how from industry experts. View our training schedule. International Payment Methods

Want to start or grow your import/export business? Learn how from industry experts. View our training schedule. International Payment Methods Want to start or grow your import/export business? Learn how from industry experts. View our training schedule International Payment Methods As the globe is becoming smaller and international trade is

More information

Non-recourse factoring

Non-recourse factoring Non-recourse factoring Optimizing your company s cash flow Our non-recourse factoring solution helps you to optimize your company s key figures in relation to solvency ratio and working capital. When it

More information

BAFT-IFSA Product Definitions for Traditional Trade Finance Publication Date: May 2011

BAFT-IFSA Product Definitions for Traditional Trade Finance Publication Date: May 2011 BAFT-IFSA BAFT-IFSA Product Definitions for Traditional Trade Finance Publication Date: May 2011 1 BAFT-IFSA Product Definitions for Traditional Trade Finance Section 1: Introduction Banks have long provided

More information

RULES ON THE CHART OF ACCOUNTS AND THE CONTENTS OF ACCOUNTS IN THE CHART OF ACCOUNTS FOR BANKS

RULES ON THE CHART OF ACCOUNTS AND THE CONTENTS OF ACCOUNTS IN THE CHART OF ACCOUNTS FOR BANKS Outsourced translation Official Gazette of RS, Nos 98/2007, 57/2008 and 3/2009 Pursuant to Article 15, paragraph 2, item 2 of the Accounting and Auditing Law (Official Gazette of RS, No. 46/2006), the

More information

1 FSA001 Balance sheet

1 FSA001 Balance sheet 1 FSA001 Balance sheet This data item provides the PRA with a snapshot of the assets and liabilities of a firm, and details of items which although not on the balance sheet, nevertheless will have a potential

More information

Chapter 7: Cash & Receivables L7 (pg 399 436)

Chapter 7: Cash & Receivables L7 (pg 399 436) Chapter 7: Cash & Receivables L7 (pg 399 436) UNDERSTANDING CASH AND ACCOUNTS RECEIVABLE How Do Companies Manage and Control Cash? Cash flow budgets help anticipate cash needs and minimize borrowing requirements

More information

OVERSEAS TRADE FINANCE ( OTF )

OVERSEAS TRADE FINANCE ( OTF ) OVERSEAS TRADE FINANCE ( OTF ) Port to Port Trade Finance Trade Finance Equity Trade Finance Report 3 Port to Port Trade Finance Trade Finance Equity Overseas Trade Finance specialise in sourcing trade

More information

Toll Free: 1.888.XPORTSK (9767875) (in North America) Email: inquire@sasktrade.sk.ca www.sasktrade.sk.ca

Toll Free: 1.888.XPORTSK (9767875) (in North America) Email: inquire@sasktrade.sk.ca www.sasktrade.sk.ca These manuals are created as resource guides for members of Saskatchewan Trade and Export Partnership (STEP). For more information on these manuals please contact Saskatchewan Trade and Export Partnership

More information

ACCOUNT DEBIT CREDIT Accounts receivable 10,000 Sales 10,000 To record the sale of merchandise to Sophie Company

ACCOUNT DEBIT CREDIT Accounts receivable 10,000 Sales 10,000 To record the sale of merchandise to Sophie Company CURRENT RECEIVABLES Receivables are the amount owed to the organization by its customers and/or others. Current receivables will be collected within one year or the current operating cycle which ever is

More information

Infor LN Financials User Guide for Accounts Receivable

Infor LN Financials User Guide for Accounts Receivable Infor LN Financials User Guide for Accounts Receivable Copyright 2015 Infor Important Notices The material contained in this publication (including any supplementary information) constitutes and contains

More information

Invoice Finance. Contents. Factoring and Invoicing Discounting 1. The Advantages 2

Invoice Finance. Contents. Factoring and Invoicing Discounting 1. The Advantages 2 Invoice Finance All businesses rely on receiving money for goods and services that they provide and if everyone paid their bills on time wouldn t life be much simpler! Invoice Finance is the means by which

More information

AGENDA ITEM XI: CONSUMER CREDIT

AGENDA ITEM XI: CONSUMER CREDIT SCREENING CHAPTER 28 Country Session: LEGAL BASIS LAW NO. 4077 ON CONSUMER PROTECTION AMENDED BY LAW NO. 4822 (OG No: 25048, 14 March 2003) Came into force on 14 June 2003 BY-LAW ON RULES AND PROCEDURES

More information

Citi Supplier Finance

Citi Supplier Finance Treasury & Trade Solutions North America Trade Finance Citi Supplier Finance Supplier Finance Program for UTC Suppliers The Solution UTC and Citi have entered into a partnership that enables preferred

More information

Trade Services Service & Price Guide

Trade Services Service & Price Guide Trade Services Service & Price Guide Version1: April-2014 Standard pricing applicable for Trade Services (applicable for Wholesale Banking / Transaction Banking / SME & Consumer Banking Clients of Standard

More information

Chapter 07 - Accounts and Notes Receivable. Chapter Outline

Chapter 07 - Accounts and Notes Receivable. Chapter Outline Chapter 07 - Accounts and Receivable I. Accounts Receivable A receivable is an amount due from another party. Accounts Receivable are amounts due from customers for credit sales. A. Recognizing Accounts

More information

Telegraphic transfers and bank drafts

Telegraphic transfers and bank drafts Telegraphic transfers and bank drafts Businesses and individuals frequently need to transfer funds abroad in payment of goods or services provided by an overseas supplier. These transfers are a convenient

More information

Marketing Consultancy Division (MCD) Export Consultancy Unit (ECU) Export in Focus. Jumada Awal, 1428 (May, 2007)

Marketing Consultancy Division (MCD) Export Consultancy Unit (ECU) Export in Focus. Jumada Awal, 1428 (May, 2007) Marketing Consultancy Division (MCD) Export Consultancy Unit (ECU) Export in Focus Factoring & Forfaiting Jumada Awal, 1428 (May, 2007) 1 Factoring & Forfaiting While the business opportunities associated

More information

General Form of Factoring Agreement regarding the Assignment of Accounts Receivable

General Form of Factoring Agreement regarding the Assignment of Accounts Receivable General Form of Factoring Agreement regarding the Assignment of Accounts Receivable Agreement made on the (date), between (Name of Factor), a corporation organized and existing under the laws of the state

More information

Indian Accounting Standard (Ind AS) 39 Financial Instruments: Recognition and Measurement

Indian Accounting Standard (Ind AS) 39 Financial Instruments: Recognition and Measurement Indian Accounting Standard (Ind AS) 39 Financial Instruments: Recognition and Measurement Contents Paragraphs Objective 1 Scope 2 7 Definitions 8 9 Embedded derivatives 10 13 Recognition and derecognition

More information

IGAS 3. Cash Flow Statements. Government Accounting Standards Advisory Board. Contents

IGAS 3. Cash Flow Statements. Government Accounting Standards Advisory Board. Contents Cash Flow Statements Government Accounting Standards Advisory Board Contents Description Page Number 1. Introduction 3 2. Objective 3 3. Scope 3 4. Benefits of Cash Flow Information 4 5. Definitions 4

More information

Accounting 303 Exam 3, Chapters 7-9 Fall 2013 Section Row

Accounting 303 Exam 3, Chapters 7-9 Fall 2013 Section Row Accounting 303 Name Exam 3, Chapters 7-9 Fall 2013 Section Row I. Multiple Choice Questions. (2 points each, 28 points in total) Read each question carefully and indicate your answer by circling the letter

More information

UNIT 7 CASH AND FUNDS FLOW STATEMENTS MODULE - 2

UNIT 7 CASH AND FUNDS FLOW STATEMENTS MODULE - 2 UNIT 7 CASH AND FUNDS FLOW STATEMENTS MODULE - 2 UNIT 7 CASH AND FUNDS FLOW STATEMENTS Structure 7.0 Introduction 7.1 Unit Objectives 7.2 Meaning of Cash Flow Statement 7.3 Preparation of Cash Flow Statement

More information

Sale of receivables from the Spanish Public Health Care Sector. Cleaning up your Balance Sheet

Sale of receivables from the Spanish Public Health Care Sector. Cleaning up your Balance Sheet Sale of receivables from the Spanish Public Health Care Sector Cleaning up your Balance Sheet Index i. Problem ii. Solution The Non Recourse sale of receivables to IOS Finance Key Accounting Considerations

More information

Factoring Services WHAT IS FACTORING? MECHANICS OF FACTORING

Factoring Services WHAT IS FACTORING? MECHANICS OF FACTORING Factoring Services S Balasubramanian, Vice President (Finance) & Company Secretary, Canbank Factors Ltd., Bangalore. Realisation of outstanding dues is increasingly becoming a complicated and tedious exercise.

More information

Understanding Invoice Finance

Understanding Invoice Finance Understanding Invoice Finance Introduction John Mackey Senior Business Development Manager Ronan Horgan Managing Director Content What is Invoice Finance? Industry Background Who can avail of Invoice Finance?

More information

CA CPT SAMPLE PAPER FUNDAMENTAL ACCOUNTING (60MARKS)

CA CPT SAMPLE PAPER FUNDAMENTAL ACCOUNTING (60MARKS) CA CPT SAMPLE PAPER FUNDAMENTAL ACCOUNTING (60MARKS) 1. Which of the following provide frame work and accounting policies so that the financial statements of different enterprises become comparable? (a)

More information

Dr. Muhammad Ather Elahi. In Conference on Normalizing Indo-Pak Trade Relations ICRIER, New Dehli

Dr. Muhammad Ather Elahi. In Conference on Normalizing Indo-Pak Trade Relations ICRIER, New Dehli Dr. Muhammad Ather Elahi In Conference on Normalizing Indo-Pak Trade Relations ICRIER, New Dehli Trade Financing An overview Risks in Trade Financing Trade Financing Products Documentation Challenges Issues

More information

Subject. PAPER No. : Financial Management MODULE No. : Factoring services

Subject. PAPER No. : Financial Management MODULE No. : Factoring services Subject Paper No. and Title Module No. and Title Module Tag Paper No.8: Financial Management Module No. 36: Factoring services COM_P8_M36 TABLE OF CONTENTS 1. Learning outcomes 2. Introduction 3. Mode

More information

Credit Risk. Loss on default = D x E x (1-R) Where D is default percentage, E is exposure value and R is recovery rate.

Credit Risk. Loss on default = D x E x (1-R) Where D is default percentage, E is exposure value and R is recovery rate. Credit Risk Bank operations involve sanctioning of loans and advances to customers for variety of purposes. These loans may be business loans for short or long term commitments and consumer finance for

More information

International Accounting Standard 39 Financial Instruments: Recognition and Measurement

International Accounting Standard 39 Financial Instruments: Recognition and Measurement EC staff consolidated version as of 18 February 2011 FOR INFORMATION PURPOSES ONLY International Accounting Standard 39 Financial Instruments: Recognition and Measurement Objective 1 The objective of this

More information

ROLE OF TRADE FINANCE

ROLE OF TRADE FINANCE Volume 3, Issue 5 (May, 2014) Online ISSN-2277-1166 Published by: Abhinav Publication Abhinav National Monthly Refereed Journal of Research in ROLE OF TRADE FINANCE Hemanshu Kapadia Proprietor, Practicing

More information

GUIDE TO INTERNATIONAL PAYMENT METHODS. Making international trade accessible to every business

GUIDE TO INTERNATIONAL PAYMENT METHODS. Making international trade accessible to every business GUIDE TO INTERNATIONAL PAYMENT METHODS Making international trade accessible to every business 2 As the globe is becoming smaller and international trade is becoming easily accessible, the issue of moving

More information

Affidavit Of Charles A. Smart

Affidavit Of Charles A. Smart IN THE UNITED STATES OF AMERICA BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION Duke Energy Moss Landing LLC ) Docket No. ER--000 Duke Energy Oakland LLC ) Docket No. ER--000 Affidavit Of Charles A. Smart

More information

CHAPTER 27. Short-Term Financial Planning. Chapter Synopsis

CHAPTER 27. Short-Term Financial Planning. Chapter Synopsis CHAPTER 27 Short-Term Financial Planning Chapter Synopsis 27.1 Forecasting Short-Term Financing Needs The first step in short-term financial planning is to forecast the company s future cash flows. This

More information

J. Gaspar: Adapted from Jeff Madura, International Financial Management. Slides by Yee-Tien (Ted) Fu

J. Gaspar: Adapted from Jeff Madura, International Financial Management. Slides by Yee-Tien (Ted) Fu Chapter 19 Financing International Trade J. Gaspar: Adapted from Jeff Madura, International Financial Management 19. 1 Slides by Yee-Tien (Ted) Fu Merchandise Trade Merchandise trade, i.e., exports and

More information

Guide Book to Factoring

Guide Book to Factoring Guide Book to Factoring 1 Contents Welcome 3 Our Aim 4 Introduction 5 New Customers 6 Submitting your invoices and credit 7 notes Calculating your availability 8 Disapprovals for funding 9 Funding 10 Credit

More information

Forfaiting. An Introduction

Forfaiting. An Introduction Forfaiting An Introduction FINANZ AG ZÜRICH 10 Bleicherweg PO Box 900 CH - 8070 Zurich Switzerland Telephone: +41 1 211 28 30 Telefax: +41 1 211 38 54 www.finanzag.csfb.com Forfaiting is a trade finance

More information

Accounting and Reporting Policy FRS 102. Staff Education Note 11 Foreign exchange contracts

Accounting and Reporting Policy FRS 102. Staff Education Note 11 Foreign exchange contracts Staff Education Note 3 Foreign Exchange Contracts Accounting and Reporting Policy FRS 102 Staff Education Note 11 Foreign exchange contracts Disclaimer This Education Note has been prepared by FRC staff

More information

Statements MAKEorBREAK Sample Questions

Statements MAKEorBREAK Sample Questions Castle 2.3 Statements Got the answer? Be the first to stand with your group s flag. Got it correct? MAKE or BREAK a castle, yours or any other group s. The group with the most castles wins. Enjoy! Question

More information

Infor LN Financials User Guide for Cash Management

Infor LN Financials User Guide for Cash Management Infor LN Financials User Guide for Cash Management Copyright 2015 Infor Important Notices The material contained in this publication (including any supplementary information) constitutes and contains confidential

More information

Intermediate Accounting

Intermediate Accounting Intermediate Accounting Thomas H. Beechy Schulich School of Business, York University Joan E. D. Conrod Faculty of Management, Dalhousie University PowerPoint slides by: Bruce W. MacLean, Faculty of Management,

More information

Discounting, Factoring & Forfeiting

Discounting, Factoring & Forfeiting Discounting, Factoring & Forfeiting Introduction Bill Discounting Factoring- Meaning & Definition Modus Operandi Terms of Agreement Functions Types of Factoring Factoring Vs Discounting Cost of Factoring

More information

The attached is a draft of the type of working capital facility document that National Australia Bank, Mumbai branch, might enter into with its

The attached is a draft of the type of working capital facility document that National Australia Bank, Mumbai branch, might enter into with its The attached is a draft of the type of working capital facility document that National Australia Bank, Mumbai branch, might enter into with its customers. The draft is not meant to be, nor should it be

More information

Draft Guidelines for setting up of and operating TReDS

Draft Guidelines for setting up of and operating TReDS Draft Guidelines for setting up of and operating TReDS Micro, Small and Medium Enterprises (MSMEs), despite the important role played by them in the economic fabric of the country, continue to face constraints

More information

THE CONCEPTUAL FRAMEWORK OF FACTORING ON SMALL AND MEDIUM ENTERPRISES

THE CONCEPTUAL FRAMEWORK OF FACTORING ON SMALL AND MEDIUM ENTERPRISES THE CONCEPTUAL FRAMEWORK OF FACTORING ON SMALL AND MEDIUM ENTERPRISES Minaxi Rani Assistant Professor (Extn.), Department of Commerce, Govt. College for women P.G. College, Hisar, Haryana, (India) ABSTRACT

More information

Graphite Electrodes. Imposition of antidumping duty augurs well. Sector Update. ICICI Securities Ltd Retail Equity Research.

Graphite Electrodes. Imposition of antidumping duty augurs well. Sector Update. ICICI Securities Ltd Retail Equity Research. Sector Update Rating matrix Target price Company Old New CMP Potential Upside HEG 225 275 238 19% Graphite India 85 15 91 18% Target period 12-15 months Price performance (%) Return % 1M 3M 6M 12M HEG

More information

CHAPTER 22. Liabilities CONTENTS

CHAPTER 22. Liabilities CONTENTS CHAPTER 22 Liabilities CONTENTS 22.1 Journal entries for various liabilities 22.2 Journal entries for employee entitlements 22.3 Provision for warranty claim expenses 22.4 Finance of an asset purchase

More information

33 Financial risk management and supplementary disclosures regarding financial instruments

33 Financial risk management and supplementary disclosures regarding financial instruments 33 Financial risk management and supplementary disclosures regarding financial instruments Swisscom is exposed to various financial risks resulting from its operating and financial activities. The most

More information

THE EUF GLOSSARY ON FACTORING AND COMMERCIAL FINANCE

THE EUF GLOSSARY ON FACTORING AND COMMERCIAL FINANCE Nom T THE EUF GLOSSARY ON FACTORING AND COMMERCIAL FINANCE Version 1.0 June 2012 A Common Terminology for the Industry The EUF Glossary on Factoring and Commercial Finance wishes to contribute to the establishment

More information

Transport Insurance for International trade

Transport Insurance for International trade Transport Insurance for International trade 1) International trade insurance indemnifies importers and exporters against various types of losses, including damage to goods in transit, products injuring

More information

THE BASICS OF FACTORING. A Guide to Understanding Accounts Receivable Financing

THE BASICS OF FACTORING. A Guide to Understanding Accounts Receivable Financing THE BASICS OF FACTORING A Guide to Understanding Accounts Receivable Financing The Basics of Factoring Table of Contents What is Factoring?.. 1 Benefits of Factoring 4 What Types of Businesses Utilize

More information

Receivables Management Paper-3 Part-II Financial Management Chapter-7 Unit-IV. By: CA Kapileshwar Bhalla

Receivables Management Paper-3 Part-II Financial Management Chapter-7 Unit-IV. By: CA Kapileshwar Bhalla Receivables Management Paper-3 Part-II Financial Management Chapter-7 Unit-IV By: CA Kapileshwar Bhalla Learning Objectives What is Receivables Management Review of Credit Policy What is Factoring Practical

More information

NATURE OF FACTORING. www.factors-chain.com/home www.factoring.org

NATURE OF FACTORING. www.factors-chain.com/home www.factoring.org NATURE OF FACTORING www.factors-chain.com/home www.factoring.org A US DEFINITION: a continuing arrangement between a factoring concern and the seller of goods or services on open account, pursuant to which

More information

Treatment of Mark to Market Losses on Principal only Currency Swap

Treatment of Mark to Market Losses on Principal only Currency Swap Treatment of Mark to Market Losses on Principal only Currency Swap The following is the opinion given by the Expert Advisory Committee of the Institute in response to a query sent by a member. This is

More information

It is concerned with decisions relating to current assets and current liabilities

It is concerned with decisions relating to current assets and current liabilities It is concerned with decisions relating to current assets and current liabilities Best Buy Co, NA s largest consumer electronics retailer, has performed extremely well over the past decade. Its stock sold

More information

(See section 29) Capital (Fully owned by Central Government) II. FOR BANKS INCORPORATED OUTSIDE INDIA. Capital (i)

(See section 29) Capital (Fully owned by Central Government) II. FOR BANKS INCORPORATED OUTSIDE INDIA. Capital (i) 1 THIRD SCHEDULE (See section 29) 2 FORM A FORM OF BALANCE SHEET Balance Sheet of.................................(here enter name of the Banking Company) Balance Sheet as on 31 March....................(Year)

More information

3. Market risks and derivatives. Foreign currency risk management

3. Market risks and derivatives. Foreign currency risk management 3. Market risks and derivatives The Company is exposed to a variety of financial risks: market risks (including foreign currency exchange risk and interest rate risk), credit risk, liquidity and capital

More information

Investing in Debt Funds

Investing in Debt Funds 10 February, 2012 Investing in Debt Funds Debt securities (bonds) are a fundamental part of an investing plan for most investors. There are many types of bonds along with varied approaches to debt fund

More information

Financial Planning & Control. Lecture material substantially prepared by Massey University Centre of SME Research

Financial Planning & Control. Lecture material substantially prepared by Massey University Centre of SME Research Financial Planning & Control Working Capital & Tax Lecture material substantially prepared by Massey University Centre of SME Research Financial Planning & Control Appropriate financial systems Used effectively

More information

Epicor ERP Epicor ERP Accounts Receivable Transaction Hierarchy

Epicor ERP Epicor ERP Accounts Receivable Transaction Hierarchy Epicor ERP Epicor ERP Accounts Receivable Transaction Hierarchy 10 Disclaimer This document is for informational purposes only and is subject to change without notice. This document and its contents, including

More information