what is a E factor in finance??????????can any one tell??
1 Replies
Ankur
(Ipcc student)
(332 Points)
Replied 20 January 2011
The cost of holding stock or waiting for stock to arrive from overseas can inhibit sales growth and limit business success.
Trade finance facilities enable clients to access cash tied up in debtors and stock effectively bringing future profits into your business for use today.
Example:
A business must pay up front to import goods from China. It takes 30 days for the goods to arrive from China when they are invoiced. It then takes 60 days for the invoice to be paid.
Without e-factor the client has to fund three months of trade themselves. But e-factor can fund this whole life cycle. This is done by funding a letter of credit to import the goods. When the goods arrive they are invoiced and a e-factor Factoring facility is used to pay for the life cycle. The invoice is then paid, repaying e-factor and allowing the client to take their profits.
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