Domestic Factoring
Domestic factoring is the factoring of accounts receivables generated from sales made in India. Here, the open account term receivables generated from sales are assigned to a factoring company like SBI Factors. The selling firm receives up-front payment of 80-90% of the invoice amount, depending upon the terms of the agreement.
Features of Domestic Factoring
- Performance of the Client: The client's obligation should be met prior to obtaining funding.
- Continuous Sales Flow: There has to be a continuous flow of sales to the same debtor or set of debtors.
- Credit Terms: It is suitable for credit periods ranging from 30 to 180 days.
- Open Account Terms: The client and debtor must deal on open account terms.
- Consistent Assignment: Credit sales to a debtor should be consistently assigned to the factor once the factoring arrangement comes into place.