JAIIB | IE AND IFS | FACTORING – CASE STUDY

Unlock the potential of factoring to empower your financial decision-making and enhance cash flow management for businesses. Learning sessions present JAIIB courses to master your skills in the Indian Economy (IE) and Indian Financial System (IFS), setting you on the path to a successful banking career.

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Learning Sessions presents this article on the case study and provides insightful knowledge about the concept of factoring. Factoring is a financial service where a business sells its accounts receivable (unpaid invoices) to a factor (a financial institution) at a discount in exchange for immediate cash. This helps businesses improve their working capital, enabling them to pay suppliers, meet operational expenses, and invest in growth without waiting for customers to settle their invoices.

Key terms:

-Accounts Receivable : The outstanding invoices or money owed by customers for goods or services.

-Factor : A financial institution or company that purchases the receivables.

-Discount : The difference between the invoice value and the amount paid by the factor, representing the factor’s fees and interest.

Factoring is a financial service that offers a lifeline to businesses by providing immediate cash against receivables.

Types of Factoring:

1. Recourse Factoring
2. Non-Recourse Factoring
3. Domestic Factoring
4. International Factoring

For the extensive preparation of candidates, get details through our YouTube videos for JAIIB IE & IFS Module wise Syllabus with explanations and tips to help candidates in their preparation journey.

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On the whole, Factoring is a vital financial service that supports the growth of businesses by providing immediate liquidity against unpaid invoices. In the Indian context, factoring plays a significant role in enhancing the working capital of SMEs, reducing payment delays, and supporting international trade. Factoring not only enhances cash flow for businesses but also contributes to financial inclusion, reduces credit risk for financial institutions, and supports economic growth by facilitating international trade. For JAIIB applicants, understanding the concept of factoring, its contribution in the Indian Economy, and its significance within the Indian Financial System is determining. Learning Sessions provides additional information about JAIIB IE & IFS FINANCIAL SYSTEM  by giving examples of real life scenarios.

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