| dc.description.abstract | Factoring is a financial transaction in which a business sells its accounts receivable (i.e., invoices) to a third party (called a factor) at a discount. This business is called as ＂accounts receivable acquisition business＂ in Taiwan. Factors are categorized as bank factors and non-bank factors. Bank factors, which provide financing role to the seller, are majority either in Mainland China or in Taiwan. Meanwhile, non-bank factors play their roles in managing and collecting receivables for their clients, and guarantee the accounts payable. In the events of bankruptcy or non-performing debts, factors are required to bear the losses. That is, if factors provide the financing services, they tend to be exposed to great risks, particularly for non-bank factors.
In this study, we employ the case study method to discuss and analyze the business models and risks that are associated with factors. This case is a non-bank factor in Suzhou Industrial Park, China, which is established in 2016. This study focus on the business models of factor in Mainland China. Firstly, this study introduces the factoring business and analyzes the factoring markets. Secondly, this study conducts in-depth analysis the business models for the case company. Finally, this study provides some suggestions for the business of factors for future development.
The conclusions of this study can be summarized as follows: In order to mitigate risk, this study suggests that non-bank factors should focus their business on providing pure factoring services: 1.managing receivables, 2.collecting receivables, 3.guaranteeing the accounts payable. Financing business should be provided by bank factors, rather than by non-bank factors. Further, trade terms between buyers and sellers should be negotiated under the assistances by factors and banks, to results in a win-win scenario. | en_US |