What is export factoring?

What is export factoring?

• A. It provides insurance against non-payment.
• B. The factoring organisation chases payment for overseas trade receivables.
• C. It guarantees 100% upfront.
• D. It is a form of bank loan.

Answer: (B)

Export factoring is a service where a factor takes over the exporter’s overseas receivables and handles collecting payments from foreign buyers. The essential idea is that the factor chases the payments on behalf of the exporter, helping cash flow and manage credit risk. Some export factoring arrangements include insurance against non-payment, but the core function is the collection of overseas trade receivables, not a guaranteed upfront payment or a bank loan.

Export factoring is a service where a factor takes over the exporter’s overseas receivables and handles collecting payments from foreign buyers. The essential idea is that the factor chases the payments on behalf of the exporter, helping cash flow and manage credit risk. Some export factoring arrangements include insurance against non-payment, but the core function is the collection of overseas trade receivables, not a guaranteed upfront payment or a bank loan.