23/04/2008 - 22:00

Steady growth in international factoring

23/04/2008 - 22:00

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Debtor finance company Scottish Pacific Benchmark has hailed the strong growth of international factoring, based on figures released by the global cooperative Factors Chain International.

Debtor finance company Scottish Pacific Benchmark has hailed the strong growth of international factoring, based on figures released by the global cooperative Factors Chain International.

FCI is a global network of leading factoring companies whose common aim is to facilitate international trade through factoring and related financial services.

Scottish Pacific Benchmark, formed when Perth-born Benchmark acquired Scottish Pacific, is the largest FCI member in Australia with more than 70 per cent of the Australian international factoring market.

SPB chief executive Peter Langham said the figures showed global factoring increased 15 per cent last year to 1.2 trillion euros at the end of 2007.

Some of the strongest growth was in the area of export finance.

Advantages to exporters from a factoring arrangement include working capital, credit risk protection and collection service, while the importer benefits from buying on open account terms without the need to open letters of credit or to accept other payment conditions with a similar restrictive character, Mr Langham said.

For exporters, there is a non-recourse factoring facility where Scottish Pacific Benchmark assumes 100 per cent of the credit risk on the overseas buyer, while still advancing up to 80 per cent on dispatch of the goods and the remainder on collection or debtor default.

Export factoring thus gives security of payment and cashflow without the need to impose letter of credit terms on potential customers.

SPB acts as the import factor and can offer 100 per cent credit cover on Australian buyers and handle all collection activities for companies overseas.

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