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Factoring

Factoring credit is a short-term loan used as working capital in the business by BGPL, which shall buy trade debtors who have completed delivery of the goods and/or service but the payment has not yet become due. The seller has to transfer the claim for receiving the payments, cost of the goods and/or service made by the buyer to BGPL with delivery of the trade documents (such as the goods delivery note, invoice and billing, etc) to BGPL. Then you will receive the advance money for use as working capital and BGPL shall collect the bill and/or service from the buyer on the due date on your behalf. It can be divided into:

  1. Domestic factoring
  2. International factoring

Domestic factoring cycle

Domestic factoring cycle

At present BGPL is a member of Factors Chain International (FCI), which has more than 180 companies as members in 54 countries around the world. The FCI is established in cooperation among the factoring providers around the world that are member countries. It is to support factoring among the countries and financial service involving the same standards and helps BGPL to have readiness to provide credit to the importers and exporters divided into:

  1. Import factoring

    In the case you are an importer but has a restraint on opening the L/C (letter of credit), or is worried about the expense burden arises from opening the L/C, so the import factoring by BGPL can help solve your problem. It acts as the middleman in coordinating with the seller’s domestic factoring company, then the seller is confident in selling the goods to you without using the L/C.

  2. Domestic factoring cycle

    The international trade market at present has fierce competition as the day goes by, while the buyers have higher negotiation power. Other than the competition on the goods quality, the offer for a lenient payment also has become important as well, e.g. the document against acceptance (D/A), document against payment (D/P) or an open account with a longer term credit.

Conditions for repayment without opening an L/C (non L/C), so the seller has to take a higher risk burden. The export factoring of BGPL can help you overcome it by taking the risk that the overseas buyer will have a financial problem and you cannot pay for your goods. BGPL shall pay for the goods on behalf of the buyer within 90 days following the due date. However, there is a condition that requires the Seller not breaching the agreement on the sale and the Buyer has no trade dispute.

Advantages of the factoring credit

  1. It helps promoting liquidity for the business
  2. It is a source of working capital that need no securities guarantee
  3. The credit limit is flexible based on the turnover
  4. It helps to increase the negotiation power on raw materials and/or a trade discount
  5. It can help to use the interest to deduct the expense on the whole amount, compared with using the outside financial sources.
  6. It helps to collect the bill for the goods/service on the due date.

In the case of export factoring, it shall receive additional benefits as follows:

  1. It provides examination of the overseas buyer’s credit.
  2. It increases the competitiveness by offering the payment terms without using the L/C.
  3. It guarantees against bad debts up to 100% of the export value.
  4. It has the clearer terms of compensation.

Qualifications of the customer (Goods seller)

  1. It is a legal entity who has registered for a minimum of 3 years. In the case of registering below 3 years it must have an affiliate to guarantee it.
  2. The operation results have the net profit a minimum of two years.
  3. The monthly revenue is no less than 2 million baht.
  4. The total credit is about 1 million baht and up.
  5. It is not a debtor with a problem with the financial institution.

Qualifications of the buyer (Trade debtor)

  1. It is a legal entity and registered as a VAT operator.
  2. Its office /collection unit is in Bangkok or the vicinity.
  3. It has been operating for a reasonable long period of time and should have its financial status is reliable, acceptable and in compliant with the conditions in the notice of transferring the right. Documents supplement the loan consideration

Documents supplement the loan consideration

  1. A copy of the articles of incorporation with objectives (within 3 months) with a list of the shareholders.
  2. A copy of the ID card and House Registration of the authorized persons and the guarantor.
  3. A copy of the VAT 20 and VAT 30 registration forms.
  4. A copy of the financial statement in retrospective 3 years.
  5. A copy of the main bank account in retroactive for 6 months

Preliminary conditions

  1. He can receive the advance payment by 70-90% of the invoice value for the goods.
  2. The duration of the invoice (credit terms given to the buyer) is no more than 180 days.
  3. Two guarantors by company’s directors or major shareholders are required.

For more information call 02 679 6226