In today's competitive markets,it is no longer a cakewalk for any corporate to hold and sustain its business as it is often exposed to a gamut of risks. It'd all the more difficult for a young and upcoming enterprise that needs enough financial muscles to confront contingencies. A steady stream of liquid cash is the life hold for any business house, for which they usually depend on banks and financial institutions. However, for small and medium enterprises (SMEs), raising credit from institution sources is difficult task as these institution insist on collateral securities. To counter this , factoring is catching on amongst India's SMEs. Factoring mainly assists companies with quick payment for their services in the form of financing working capital, management of the sellers' sales ledger, collection of debts purchased and credit risk protection. Apart from these four basic services, factoring play also provide assured advisory services to the clients by leveraging their experience.in credit and financial dealings and access to widespread credit information.
Almost every industry can reap benefits from factoring including textiles, manufacturing ,electronics and pharmaceuticals, IT and processed food industry. Recently, services-led export companies also showing interest in factoring services.The biggest problem that the exporters are facing is the increasing instance by importers for "an open account trade" in which payment can be made by the importer many weeks or months after the delivery of goods. However, in the meantime, exporter,exporters face concerns such as lack of working capital, credit risk, delayed collection of bills receivables and bad debts. Today, they are minimizing these risks by adopting factoring services providers who collect money from importers with protection .
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