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Finance India
Finance India
Finance India
Accruals
Trade credit
Advances by banks
Public deposits
Inter corporate deposits
Short term loans form financial institutions and NBFCs
Rights debentures for working capital
Commercial paper
Factoring
International factoring
Forfaiting
commercial paper
♦ The fund base working capital limit is not less than Rs. 5 crores.
♦ The issuers should ensure that the credit rating at the time of
applying to RBI should not be more than two moths old.
Factoring
Factoring allows the seller to outsource the activities related to giving credit and
collection.
Benefits of Factoring
(i) The firm can convert accounts receivables into cash without bothering about
repayment.
(ii) Factoring ensures a definite pattern of cash inflows.
(iii) Continuous factoring virtually eliminates the need for credit department.
(iv) Unlike an unsecured loan, compensating balances are not required in this
case.
Another advantage consists of relieving the borrowing firm of substantial credit
and collection costs and to a degree from a considerable part of cash
management.
References
Prasanna Chandra, Financial Management, 5th Ed., Tata McGraw Hill, 2001
Brealey and Myers, Corporate Finance, Fifth Edition, Prentice Hall India, 2001
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