Factoring

Factoring means an integrated financial service including buyer credit checking, collection of receivables management, credit protection, sales ledger management and prepayment against receivables rendered by Bank of China (Hong Kong) Limited Jakarta Branch (“Bank” / “BOC”) to Seller (“Customer”) based on the assignment of receivables, when the Customer sells goods or provides services to a buyer by way of credit such as open account & documentary against acceptance (D/A).

1. Factoring is an integrated financial service provided by the Bank to the Customer based on the assignment of trade receivables arising from the sale of goods or provision of services to the Buyer on credit terms, such as Open Account or Documentary against Acceptance (D/A).
2. Under the factoring agreement, the Customer assigns its eligible receivables to the Bank, whereby the Bank may provide prepayment against the assigned receivables prior to the receivable’s maturity.

1. Provide earlier cash flow to the Customer by converting outstanding trade receivables into immediate cash before the invoice maturity date.
2. Reduce the risk of uncollected receivables, as the credit risk of the Buyer is transferred to the Bank.
3. Support the Customer commercial transactions by enabling the Customer to offer credit terms to its Buyer while obtaining earlier payment for the underlying receivables.

1. The customer remains responsible for the accuracy and validity of the invoices and underlying transactions.
2. Any dispute or issue related to the underlying transaction may affect the collection of the receivables.
3. The customer may be required to compensate the Bank for matters specified in the factoring agreement.
4. Risk that the auditor may determine the receivables purchase transaction by Bank being classified as loan in the books/accounting record of the Customer.

1. Seller / Exporter whose sales of Goods and/or Services have been shipped or delivered to the buyer under open account trading or documentary against acceptance (D/A).
2. Seller / Exporter who has established and recurring business transactions with buyers and maintains a stable sales and receivables history.
3. Seller / Exporter who owns all rights and interest to its account receivables and capable to ensure punctual payment received from their buyers.
4. Seller / Exporter who intends to sell and assign its eligible account receivables to the Bank in exchange for prepayment of the receivables or payment of the purchase price of the receivables.

1. The Customer has an account with the Bank and completes the required documents related to the trade transaction.
2. The Customer applies for Factoring facility by submitting the Facility Application Form and other supporting documents to the Bank.
3. The Customer provides the Buyer list in respect of the receivables to be assigned to the Bank.
4. The Customer signs the Factoring Agreement.
5. The Customer assigns the receivables to the Bank by submitting the Notification of Debts other supporting documents (e.g. invoice, proof of delivery of goods/services) provided by the Customer to the Bank.
6. The Bank and the Customer notify the Buyer of the assignment of the receivables.
7. Customer requests prepayment to the Bank using Request for Prepayment under the Factoring Agreement form.
8. The Bank will check the Customer's factoring limit and other supporting documents, whether it is in accordance with the applicable terms and conditions.
9. The bank will process the disbursement and transfer funds to the Seller.
10. At the maturity of the prepayment or when receiving payment from the Buyer, Bank will settle the outstanding of the prepayment. 

Click here to know more about Factoring product.