User talk:Canbankfactors

TRY FACTORING What is  Factoring? Factoring is  a new  financial  services  which  was  introduced  in 1991 in  India. It is  not  just a single service; in fact a portfolio  of complementary  financial  services. HISTORY Incorporated in 1991 Canbank Factors Ltd(CBFL)  is a pioneer  in  the  field  of Factoring Services in India. It is subsidiary of Canara Bank, a leading  public sector Bank, known  for its  diversified  and  professional  services. Andhra Bank and small Industries Development  Bank  of India(SIDBI) are the co-promoters. CBFL is registered  with  Reserve  Bank  of  India as a Non-Banking  Financial Company  bearing  Registration  No-02.00004. CBFL is a professionally managed company with a totally  computerized environment  and  known  for  its quick decisions and  constant up gradation of products. CBFL has retained  its  premiere position  in the Factoring  Industry  in India for more than two decade. The company’s  business  commitment  is  to convert  the  account receivables  of the  client into cash as soon as client’s  customers are billed.

CAPITAL STRUCTURE The paid-up capital of the company  is Rs.200 crores, the pattern  of holding is as under:

SHARE HOLDER	HOLDING(%) Canara Bank	70.00 Small Industries Development  Bank  of India	20.00 Andhra Bank	10.00 Total	100.00

CREDIT RANKING CRISIL a  leading  credit  rating  agency  in India has rated: The short   term  borrowings  have been  rated as “A1+”(including  highest  degree  of  safety) BUSINESS The main  activities  of CBF  can be  classified  as  under: DOMESTIC FACTORING Factoring is a powerful  alternative instrument, particularly  designed  to meet the  post  sales working  capital requirement  of the industrial/trade/service sector. CLIENTS enter  into a factoring arrangement  with the FACTOR, who  takes responsibility for  dealing  with  their  RECEIVABLES. FACTOR fixes  a limit for purchase of DEBTS and allows PREPAYMENT  generally up to 80% of the invoice value. INVOICE DISCOUNTING Invoice Discounting is also a variant of  factoring. Under this, finance is  provided  against  invoices  backed by LCs  of Banks. This will enhance the liquidity by converting  credit  sales  into cash  sale. Finance will be  provided  once LC opening  bank  confirms  the due date of payment. Rate of discount  and charges are very competitive and in accordance with the market trends. This product is extended with  the  support  of Hundi, Undertaking  letter cum  indemnity & Tripartite agreement  selectively  fir factoring  the purchases of the client. ASSET COMPOSITION Most of CBF clients belong to Automobile Components, Bulk Drugs, Chemicals, paper & Packaging materials, cable & Conductors, Electronics, Electrical Engineering and Service sectors. More than 50% of the funds are deployed in the medium, small micro enterprises (MSME) PRODUCT EXPANSION The company  is  following  very  prudent  business  policies and  is  quick  in responding  to the needs  of the clients. The company  has plans to introduce other  variants  of Factoring and  to improve  its  working  efficiency  by  “Networking” of its branches  with  the Registered  Office. BOARD OF DIRECTORS The affairs of the company are being managed by the Managing  Directors(a deputed  top  executive from  Canara  Bank)under  the  supervision, control  and  guidance of the Board of Directors. The Board  comprises  of  eminent  personalities  drawn  from  Banking & Finance profession, who  provide the necessary  expertise  to steer  the company  to new  horizons. The company  is managed  in a professional  manner  in a computerized  environment  by  qualified, competent and dedicated staff. NETWORK OF BRANCHES The company  has 11 branches located  at Bangalore ,Chennai, Hyderabad, Coimbatore, Hosur, Mumbai, Pune, Delhi, Ludhiana, Ahmedabad, & Indore. A new 12th and 13th no. branch is being opened  at  Chandigarh and Bhubaneswar(ODISHA)  shortly. The Company  has  plans to expand  it’s  activities to other parts of the country  as well  in due course. Factoring is a powerful  alternative instrument, particularly  designed  to meet  the post  sales  working  capital requirement  of the  industrial/trade/service  sector. Clients (i.e.,sellers) can avail  themselves of some or all these services, according  to their individual needs. The basic  components  of Factoring  Services  are: 1)	Finance generally up to 80% of the Invoice value and in exceptional cases up to 100% of the Invoice value. 2)	Sales ledger  administration 3)	Debt collection  services 4)	Credit  insurance 5)	Advisory services

How Does    Factoring  Work? It is  very simple: CLIENTS enter  into a Factoring arrangement  with the FACTOR, who takes  responsibility  for dealing with  their  RECEIVABLES. FACTOR fixes  a limit for  purchases  of DEBTS in lieu  of Bill  Discounting or other  borrowing  facilities against  receivables  from  their bank, and  allows PREPAYMENT generally up to 80% of the invoice value. The original  invoice and little documents (like LRs or RRs) are directly sent by clients to their  CUSTOMERS(i.e. buyers) and only copies  handed  over  to the FACTOR. Depending upon  the  individual  customer  limits  fixed  by the Factor, invoices  are  purchased  and prepayment made. The original invoice  and all copies  there  of contain an  “assignment   clause” giving  notice  to  the customer  that  the debt under  the  invoice  has been  purchased  by the  Factor  and also authorizing him  to make  the  payment  directly  to the Factor  whose  receipt  shall alone be good discharge.( The  cheques  are  to be drawn  by the Customers in favour of Canbank Factors A/c the Client) The Factor  follows  up with the Customer  for  getting  payments  on due dates. Clients’ assistance is  sought  in this regard  if  there  are problems or disputes. In with  Recourse  Factoring, ultimate  customer  risk  is borne by the clients, and in Without  Recourse  Factoring, by the Factor. HOW DOES  FACTORING  BENEFIT  CLIENTS? CLIENTS have a liberal DEBTS  PURCHASED  limit, which  will  be periodically  revised  depending  upon  business  needs. Formalities with  the FACTOR  are  quite  simple. While Drawing Power  under  the  prepayment limit is revised  regularly based on Approved Debts, actual  drawings can be regulated by the Client himself, thus saving  on discount  charges. The Factor sends  monthly statements  and  reminders  to customers  for  getting  the  payments. The Factor also  maintains  regular  liaison  with  all  important Customers, which is  helpful for follow up  purposes. With the CASH  FLOW factor working better  than the  existing  arrangement, a client can be prompt in setting  his  creditors, avail cash discounts  and improve  profits. Sales ledger  of  the  Client  is  maintained  by  the  Factor  on computer, and made available every  month. FACTOR – YOUR WORKING CAPITAL PARTNER Traditionally, Commercial Banks provide  the  Working Capital Finance  to Trade  and Industry. This takes  the form of Cash  Credit facility against inventory  and  bills finance  against  receivables. For a variety of reasons (e.g. buyers  not willing  to accept  bills of exchange or LCs), suppliers  are unable  to avail bills finance and in such cases, Factoring  could be a very  feasible  alternative. Factors normally handle receivables  of the client on the whole  turnover  principle. However, it is possible to bifurcate sales into document  based  sales and open  account sales. While a limit for the  former  could be retained with  the banks, the  letter  may be tendered  for  factoring. If the  client has charged  his receivables  as  security  for  Working Capital  facility provided  by the  bank, a “Letter of Disclaimer” from the Bank would  obviously be needed. Arrangement between  the Bank  and the Factor can include routing  of all payments made by the Factor through  client’s  operative  account  with  Bank. It is as though  hypothecated  finished  goods  have  become  CASH! Thus, in factoring arrangement, all  that happens  is, the  client shares  the  post-sale components  of the  working  capital with the Factor, who  has expertise  in handling  receivables. BENEFITS TO  THE  CUSTOMER The buyer  need  not  accept  a Bill of Exchange  or open LC. He has to just  abide by the notice  on the invoice  by the seller  to pay  the money  directly  to  the  Factor  on the due date. The original  invoice  and allied  documents can be sent  directly to the customers  and only copies  are tendered  to the Factor. Thus, the process  is simple and hassle  free. Factor provides  monthly  statements  of all  outstanding. So it is convenient to plan and pay. In the days  to come, Factoring  Companies will start Credit Information Services. Prompt payment  means better  rating  and better  credibility in the market. HOW MUCH DOES FACTORING COST? Unlike Western countries, Factoring  in India  is quite inexpensive. Factor charges  Discount on the Prepayment  drawn  by the client and the rates are quite  close  to Bank’s  lending  rates. Discount charges are collected monthly on actual drawings in the prepayment account. There is also a factoring  charge, starting  from 0.10% of the invoice  value, depending  upon  the  services availed, and volume  of transactions. Factoring Charges  are collected upfront.