SESSION ON EXPORT FACTORING FOR ENHANCING EXPORTS ORGANIZED BY FIEO PUNJAB CHAPTER AT LUDHIANA

Ludhiana, August 16, 2018: FIEO Punjab Chapter organised an Interactive Session on "Export factoring - Easy access to unsecured finance for SME Exporters” at Ludhiana. Mr Ankit Jain, Director, Business Development, DRIP CAPITAL conducted the session. The DRIP CAPITAL is a California based Fintech company, focused on solving the working capital problem for SME exporters using technology. Drip’s working capital offering to exporters is a credit line, ranges from USD 100 thousand to USD 2.5 million, depending on the exporter’s size and requirement. Unlike banks, the financing is unsecured and offered without any collateral.

Mr Ankit Jain, while presenting his address said that, “Factoring is a tool of obtaining quick access to short-term export financing and mitigating risks related to payment delays and defaults by overseas buyers, is gaining traction the world over. Countries like Brazil, China, Germany and Taiwan have leveraged factoring to grow their exports. Despite the many advantages of factoring , lack of awareness, a perception of high interest rates and cumbersome documentation processes have prevented the growth of factoring services in India. The fact is that, less than a percentage point only of India's exports are backed by factoring services. For any industry, large or small, banks have been the traditional means for raising capital against collateral or some type of asset. Many small companies are unable to raise the needed capital because of a lack of assets, Factoring here in such cases, can offers a great support, as it has supported many exporters across the globe with a financing solution. However, factoring has not yet gained acceptance in India in the way it has in other major exporting nations like China, France, Italy and Germany. Embracing factoring services can also give a real boost to Indian exports”.

Mr Sarvjit Singh, Executive Member, FIEO Punjab State Committee and Proprietor, Man International (a Govt. Recognised export house), said that the objective for organizing such a session is to sensitize Punjab based exporting fraternity about the Export Factoring, which implies purchase, funding, management and collection of short term accounts receivable based on goods and services provided to foreign buyers. Export factoring has several benefits viz. increased sales in foreign markets by offering competitive terms of sale, protection against credit losses, accelerated cash flow with no additional asset / collateral requirement, liquidity to boost working capital”.

He also added that, “There are mis-conceptions regarding the Export Factoring to a large extent in our business environment, is such that, even the prominent exporting organizations in our country, be it large or small, most of them are either unaware of export factoring concept as a means of finances, or even if they do have the knowledge, they will be apprehensive about the process and expenses incurred to avail it. Estimates by the experts from factoring industry, only about 30-35% of Indian exporters are aware of export factoring. It is not that exporters in India do not avail export financing, the fact remains that they are very much in need of services that a factor can provide, but their awareness about the benefits of factoring remains low or un-explored”.

The session was well attended by close to 80 prominent exporters from the region and received a positive response.