Product definition

Domestic factoring business means that the banks or cooperatives assign the receivables formed by the commodities sold on credit and services provided by the domestic seller to the buyer also at home, on the basis of which the banks and cooperatives shall provide the seller with a series of comprehensive financial services, such as receivable account management, receivables financing, collection of receivables and assumption of buyer’s credit risks.

Application requirements

(1) The seller applying for domestic factoring business must meet the following requirements:

1. Business entity established and registered according to law within the territory of the People’s Republic of China;

2. Having opened settlement accounts with the branches of banks and cooperatives, having good relationships with the banks and cooperatives;

(2) The seller applying for financing type domestic factoring business, in addition to the above requirements, must meet the following requirements:

1. The clients of the banks and cooperatives, with good credit, who has run continuously for at least 2 years;

2. With strong economic strength, enjoying sound reputation in the trade;

3. The products sell well, with good quality and steady market;

4. The production operation is normal, a steady trading partnership has been formed with the buyer, previous trade contacts are normal;

5. Applying for domestic undisclosed factoring business, the seller shall have a credit rating above class A (including class A) evaluated by the banks and cooperatives;

6. Other conditions required by the banks and cooperatives.

(3) The buyer applying for financing type domestic factoring business must meet the following requirements:

1. Business entities registered and established according to law within the territory of the People’s Republic of China, public utilities and government agencies;

2. The main business is outstanding, running continuously for at least 2 years;

3. Having strong economic strength and capacity to pay a debt;

4. Enjoying good reputation in the trade;

5. Other conditions required by the banks and cooperatives.

(4) The one who apply to handle the receivables of domestic factoring business shall meet the following requirements:

1. The commodity transaction is true, legal and valid; the quality of the commodity is reliable, non-perishable, damaged; the price remains stable, with clear quality standard; not easy to produce trade dispute;

2. The seller has implemented the obligations and services under the business contract and can provide corresponding document such as commercial invoice and dispatch bill;

3. Terms of contract are rational and feasible, which shall not include the term “Just return the goods in case of sale failure”.  There shall be no circumstances of statutory prohibition of transfer, moreover, the contracting parties do not agree on the term that receivables are not allowed to be transferred;

4. The seller has not created any kind of security on the creditor’s right to apply for receivables financing, without any defect of right;

5. There exists no commercial dispute or controversy between the contracting parties and the buyer shall have no right of defense on the transferred receivables;

6. The receivables shall have clear expiring date or the expiring date can be deduced according to the commercial contract. In case that the receivables have no fixed expiring date, the contracting parties shall agree on the expiring date;

7.  The payment term of receivables shall be no longer than 180 days (including 180 days), and the longest shall not exceed 360 days (including 360 days). (The payment term of receivables refers to the credit term on the corresponding commercial contract or invoice)

8. Other conditions required by the banks and cooperatives.

(5) Factoring business shall not be provided to the following receivables:

1. The receivables that may result in set-off of debt;

2. The final payment under basic contract; the final payments such as quality bond;

3. The receivables with fresh goods, service, labor service and intellectual property as the object of trade (except for those that the seller has implemented all the obligations and there exist no responsibility and obligation for quality guarantee and after-sale service);

4. The receivables with other defects of right.

Financing limit

The appraisal of factoring financing limit shall implement the provisions of “Management Methods on Corporate Customer Credit of Jilin Province Rural Credit Union” . The factoring financing limit can be divided into factoring financing limit for the buyer and credit guarantee limit for the seller, which shall be approved according to the basic conditions of the seller and buyer respectively. It shall occupy the seller’s factoring financing limit approved by the banks and cooperatives to handle domestic factoring business with the right of recourse

Financing period

The financing maturity of the financing business under domestic factoring business shall be determined according to the period from the financing date to the due date for payment described on the invoice and according to the transaction history record between both parties plus the grace period accepted by the banks and cooperatives. The financing maturity shall be no longer than 1 year.

(1) The interest calculation of domestic factorage financing shall take the mode of repayment of principal with interest.

(2) there are two ways of interest charging for factorage financing , that is, receiving in advance and receiving actually. Receiving in advance means that the banks and cooperatives shall deduct the expected financing interest in advance from the factorage financing amount; receiving actually means that the factorage financing interest shall be collected together with the factorage financing repayment.

In case that the interest was received in advance, the balances shall be paid to either side as the case may be; in case of receiving actually, if the amount collected is not enough to repay the factorage financing interest, the seller shall be required to make up the balance.

If the buyer’s payment has been received before maturity date of factorage financing, the factorage financing funds can be repaid ahead of schedule after application by client and approval by our bank.