Factoring Business –A Financial Revival Strategy

Abstract

Factoring is a process of converting accounts receivables into cash .Customers do not prefer cash sales. To increase the customer convenience the institutions are going for credit sales. If these credits are not recovered then it would increase the level o nonperforming assets and thus it results in financial crunch of the organization resulting in liquidation of company. So these institutions are entering into contracts with factors prior planning for credit sales. Thus they are fixing high margins for t which include the factoring commission. This is the real reason for gaining demand for the factors. These factors are adopting unfair methods for collecting the bad debts which would tamper the image of the institutions and corporate hiring factors .some of the factors assist the companies in maintain accounts, sales ledgers, understanding the credibility of buyers, export documentation, credit administration.