Factoring is a fund based financial service. It is defined as a relationship between the banker (factor) and a business concern (the supplier), selling goods or providing services on credit, whereby the factor purchases book debts either with or without recourse to the supplier. And also it undertakes the task of recording, collecting, controlling and protecting the book debts.
Factoring Involves the
Following Functions
Purchase and collection of debts
Management of sales ledger
Credit investigation, protection and control
Financing
Advisory services
The detailed notes about Factoring, Forfeiting and Housing Finance
are given in Unit-3.
Conclusion
The Financial services the world over has undergone a profound
transformation since the early 1990s. The changed operating environment for the
financial intermediaries, underpinned by globalization, deregulation,
advancement in information technology, introduction of innovative instruments
and management practices has resulted in intense competition pressures to
provide financial services. This has exposed the financial system/financial
intermediaries to newer risks and posed serious regulatory and supervisory
challenges.