Factoring refers to the contractual relationship amongst seller, supplier, exporter and factor (a financial institution, normally a bank). Factoring business is a kind of integrated financial services including trade finance, commercial information investigation, account receivables management and credit risk control.

According to the contract, the seller will transfer the account receivables resulted from the present or future goods sales/services orders with the buyer (the debtor) to the financial institution that offers the factoring services (the factor). The factor will provide to the seller at least one of the following services:

This service will generate agency commission based on a ratio of the sales order amount and collect interest on discounted amount. Interest rate applied will normally be higher than the prime rate. Therefore, factoring business is a high return product compared to traditional banking products. In the growing competitive environment in traditional loan business, commercial banks have to turn their focus to other servicing businesses and factoring business has become one of the servicing businesses with large market demand.

ecFactoring system provides functionality of international level to the banking operations of factoring business. It provides online real time factoring transaction processing and automatically handles the accounting processing, customer sales order management and account receivable collection.

Bank users can use ecFactoring to maintain customer information, interest information, settlement information, credit line information, and fees and commissions collection etc.

User can also make adjustment and amendment to the interest information, make advancement to the maturing transaction, collect commissions and interest.

ecFactoring allows the waiver of principal or interest for early repayment and information maintenance of transactions under dispute, including dispute reason update and removal of cancelled transaction with outstanding balance and interest or error transaction.

The SME contributes to 60% of the GDP and the loan amounted to 15% of the total loan portfolio. Therefore the potential market of factoring business would be estimated to be at least 20 billion yuan. Currently, due to the fact that the mainland enterprises normally have a single and simple financial management channel, it is common and is not likely to think of financing for their receivables. Once this concept has been changed, and with the creation of a complete credit system, the need for factoring business will soar up. ecFactoring, as a mature and ideal solution, shall undoubtedly become a reliable partner for banks to enter into the factoring market.