How To Name Your Business?
Deciding a good name for the business is vitally important and challenging at the same place. There are several other factors which need to be ...Read More
Factoring provides a working capital solution and operates in much the same way as invoice discounting except this type of funding is a "disclosed" facility which means that your customers will be fully aware of the factor's existence. Factors typically advance 80% to 85% of the face value of valid invoices. A trade finance mechanism whereby an exporter sells its export receivables (bills of exchange or promissory notes, or simply issued invoices, which the exporter is selling on an open account basis) at a discount. The company purchasing the receivables is called a factor. Factors are normally specialized financial services companies, but many are owned by banks. Normally, after the factor has purchased a receivable, the importer or buyer pays the factor directly. Some factors actually issue the invoices to buyers and, in effect, operate the exporter's sale ledgers. Some factors operate on a non-recourse basis i.e. they assume the risk of nonpayment. Less frequently, the factor will take recourse to the exporter for all or part of the sums involved in the event of nonpayment or delayed payment by the buyer.
Buyer's credit is the credit availed by an Importer (Buyer) from overseas Lenders i.e. Banks and Financial Institutions for payment of his Imports on due date. The overseas Banks usually lend the Importer (Buyer) based on the letter of Credit (a Bank Guarantee) issued by the Importers (Buyer's) Bank. In fact the Importers Bank brokers between the Importer and the overseas lender for arranging buyers credit by issuing its Letter of Comfort for a fee. Buyer’s credit helps local importers access to cheaper foreign funds close to LIBOR rates as against local sources of funding which are costly compared to LIBOR rates.
LC Discount is Letter of Credit Discount. The Letter of Credit from the prime banks or financial institutions is considered as a complete security. A Letter of Credit is a letter from Bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. Let’s consider that the consignee wants to pay you after 90 days after it reaches him. But you want to be paid immediately after the documents are accepted. The banks will offer to pay you on a discount basis, meaning that they deduct a percentage from the value owing to you, which they keep as the cost of discounting; you get paid immediately the value less that the discount
The Bill discounting company (discounter or Bill discounter) will buy the trade debts (also known as accounts receivables, or your sales ledger) of the business at an agreed funding rate. Discounters typically advance 80% to 85% of the face value of valid invoices, for example. A company raises new sales invoices of Rs 1,00,000. Based on the 85% advance it would generate a cash injection of Rs 85,000. This releases working capital that would otherwise be "locked up" and provides immediate cash flow enabling you to pay creditors and use that cash for expansion and growth.
The discounter will then continue to provide you with up to 85% of the value of new sales invoices, normally within 24 hours of you raising them. The other 15% of the value of your sales invoices is passed onto you (minus fees) when the customer pays.
There are some circumstances where overpayments can be arranged, however this type of advance will be determined on the basis of how the facility has been maintained and if a successful and trustworthy transactional history has been built up. Once the facility is in place, there is no limit to the amount you can borrow as the level of finance is directly linked to the level of sales. So as your business grows so does the amount of funding available to you. This is in sharp contrast to bank overdrafts, which require regular re-negotiation and arrangement fees.
Invoice discounting facilities are normally made available to established businesses with handsome turnovers which have good systems in place to ensure reliable collections from their customers.
The fundamental difference between invoice discounting and factoring is that you are responsible for the collection of cash from your debtors. The payments that you receive are paid into a nominee bank account which is administered by the invoice discounter. Where a Confidential Invoice Discounting facility (CID) is in place your customers are unaware that a discounter is funding your business. For any business the potential for bad debt will always be an issue. If you are concerned about bad debts, many discounting companies can provide a facility that will include bad debt insurance protection for additional security.
The most suitable candidates for factoring and invoice discounting are growing businesses because the level of funding grows proportionately as turnover increases. However, if you are using traditional loan and overdraft facilities which the bank will not increase, then this type of facility will provide a solution for cash flow.
Although this is a relatively low cost way of increasing your cash flow it would be wise to examine the costs of alternative options before entering into an agreement. Also, debt finance providers tend to prefer firms which receive invoices where it is clear that the goods or services have been delivered and where few payment disputes or credit notes have occurred.
A potentially costly mistake which some companies make when arranging a factoring service is picking the first provider they come across. There are so many providers that simply looking on the internet will probably not get you the best deal.
We provide one of the best Trade Financing Services in the India. Trade Financing is normally associated with all kinds of one-off transactional deals or revolving lines of credit, which may involve over lapping individual type transactions requiring a larger credit line to cater for, continuous business.
Private Limited Companies are those types of companies where minimum number of members is two and maximum number is two hundred. A private limited company has the limited liability of members but at the same time it has many characteristics as those of a partnership firm. A private limited company has all the advantages of partnership namely flexibility, greater capital combination of different and diversified abilities, etc., and at the same time it has advantages of limited liability, greater stability and legal entity. In this sense, a private limited company stands between partnership and widely owned public company. Identifying marks of a private limited company are name, number of members, shares, formation, management, directors and meetings, etc., The maximum number of directors shall have to be mentioned in the Articles of Association. In the grand of privileges and exemptions, the Companies Act has drawn a distinction between an independent private company and other private company which is a subsidiary to the other public company.
All the information related to any client is considered confidential and never be disclosed to anyone.
Having years of experience in respective areas and backed by skilled and experienced workforce keep us ahead.
The key to good customer service is building good relationships with clients and ensure a great impression.
Not happy with the service? You can request a refund at anytime within 30 days!.
Get support through phone, email, mobile app or live chat - 24/7, 365 days.
Easily pay online with EMI payments, credit or debit card, net banking, PayPal and more.
Thank you very much for all your help in setting up my new company and clearing up all outstanding business in my sole trader accounts. For the first time in years I have peace of mind regards my business accounts. Your workforce are a credit to you, the girls at reception are so helpful and Chris has been brilliant. It is very much appreciated.
A US consultancy group
Rajput Jain & Associates. are a tremendous value added to me as an executive and a busy parent. It just makes sense to delegate my tax file to them -- they are proactive, extremely service oriented, and most importantly, I am completely confident they are finding every dollar of tax savings available to me.
A Leading Service Provider
We use Rajput Jain & Associates for all our accounting, Corporation tax, VAT and other compliance needs. The service is professional, courteous and prompt. I would recommend Rajput Jain & Associates to any company requiring a comprehensive accounting and tax service.
A Leading Consultancy Firm in Dubai