{"id":121760,"date":"2021-07-28T20:01:37","date_gmt":"2021-07-28T14:31:37","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=121760"},"modified":"2021-08-03T17:45:43","modified_gmt":"2021-08-03T12:15:43","slug":"how-the-factoring-business-can-help-small-companies","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/how-the-factoring-business-can-help-small-companies\/","title":{"rendered":"How the factoring business can help small companies \u00a0"},"content":{"rendered":"<p><strong>Source<\/strong>: <a href=\"https:\/\/epaper.livemint.com\/Home\/ShareArticle?OrgId=28770b02566&amp;imageview=0\">Livemint<\/a><\/p>\n<p><strong>Relevance:<\/strong> Factoring will be one of the measures to revive MSMEs.<\/p>\n<p><strong>Synopsis<\/strong>: Recently, the \u200aLok \u200aSabha\u200a cleared\u200a the \u200a<strong>Factoring \u200aRegulation (Amendment) Bill<\/strong> that aims to support this sector.<\/p>\n<h5><strong>Introduction: <\/strong><\/h5>\n<p>Micro,\u200a small\u200a and\u200a medium\u200aenterprises\u200a(MSMEs)\u200a persistently\u200a face\u200a payment delays from large clients. This hurdle will be tackled by factoring businesses.<\/p>\n<h5><strong>What is factoring business?<\/strong><\/h5>\n<ul>\n<li>When MSME suppliers have to wait long for payments, they sell the purchase invoices to factoring businesses.<\/li>\n<li>These businesses buy the invoices at a discount so that MSMEs get their money quickly. Thus, factoring helps small firms to manage\u200atheir\u200aworking capital\u200acycle.<\/li>\n<li><strong>Non-banking financial companies (NBFCs) and firms need a license<\/strong> to be in the factoring business, but not banks and statutory corporations.<\/li>\n<\/ul>\n<h5><strong>How it is done?<\/strong><\/h5>\n<ul>\n<li>Factoring is <strong>done manually as well as over the electronic exchange<\/strong> called Trade Receivables Discounting System (TReDS).<\/li>\n<li>RXIL, Invoicemart, and M1xchange are three such platforms for online factoring.<\/li>\n<\/ul>\n<h5><strong>What does the new Act seek to achieve?<\/strong><\/h5>\n<p><strong>Read<\/strong> &#8211; <a href=\"https:\/\/forumias.com\/blog\/factoring-regulation-bill-gets-the-go-ahead\/\" target=\"_blank\" rel=\"noopener\">Factoring Regulation (Amendment) Bill,2020<\/a><\/p>\n<p><strong>Benefits to small businesses: <\/strong><\/p>\n<ul>\n<li>Firstly, due to pandemic MSMEs suffering from the stretched payment cycle.\n<ul>\n<li>It has <strong>lengthened the payment wait<\/strong> for MSMEs.\u00a0A vibrant factoring industry will make financing smooth for them.<\/li>\n<li>It will improve their ability to purchase from large producers, which will help in repairing the supply chain disrupted by the pandemic and mobility restrictions.<\/li>\n<li>More players in the factoring business are expected to <strong>improve competition and efficiency.<\/strong><\/li>\n<\/ul>\n<\/li>\n<li>Secondly, one difficulty MSMEs have in access to credit is the absence of physical assets against which lenders could give credit.\u00a0A robust ecosystem of factoring in this context assumes significance.<\/li>\n<\/ul>\n<p>Hence, the number of players, as well as the factoring transactions, is expected to go up once the changes take effect.<\/p>\n<p><strong>\u00a0<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Source: Livemint Relevance: Factoring will be one of the measures to revive MSMEs. Synopsis: Recently, the \u200aLok \u200aSabha\u200a cleared\u200a the \u200aFactoring \u200aRegulation (Amendment) Bill that aims to support this sector. Introduction: Micro,\u200a small\u200a and\u200a medium\u200aenterprises\u200a(MSMEs)\u200a persistently\u200a face\u200a payment delays from large clients. This hurdle will be tackled by factoring businesses. What is factoring business? When&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/how-the-factoring-business-can-help-small-companies\/\">Continue reading <span class=\"screen-reader-text\">How the factoring business can help small companies \u00a0<\/span><\/a><\/p>\n","protected":false},"author":10316,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[216],"class_list":["post-121760","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-gs-paper-3","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1701432774},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/121760","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10316"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=121760"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/121760\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=121760"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=121760"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=121760"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}