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Team -7
Client sells the customer’s account to the Factor and notifies the customer.
Factor makes the final payment to the Client when the account is collected or
on the guaranteed payment date.
PROCESS OF FACTORING
CLIENT CUSTOMER
FACTOR
CHARGES FOR FACTORING SERVICES
2. Non-recourse Factoring
Factor purchases Receivables on the condition that the Factor has no recourse to the Client, if the debt turns out to be non-
recoverable.
Credit risk is with the Factor.
3. Maturity Factoring
Factor does not make any advance payment to the Client.
4. Cross-border Factoring
Facts about KPC
KPC produces a unique product. Very less competitors ( 2 globally).
60% of the production used to be exported i.e major share used to come from foreign
markets.
Products where used for windows , doors ,room dividers, furniture & signage.
KPC plastics have been used in the world tallest building ,major international airports , hotels
& offices.
Each order size used to run in millions of dollars with delivery & payment schedule spread
Even though the sales have increased compared to last year net income declined & actually
II. Inventory was growing quickly which resulted in cash flow squeeze.
Due to slow down of credit payments suppliers slowed their shipments. Resulted in delay of
orders to KPC.
KOREAN PLASTICS COMPANY
Income Statement