Surat: Seminar organized by Chamber of Commerce on ‘Export Factoring to Grow Your Export Business’. Loktej Surat, Business News

A seminar on ‘Export Manufacturing to grow your export business’ was organized by South Gujarat Chamber of Commerce and Industry under SGCCI Global Connect Mission 84. In which Pramit Joshi, Senior Director, Credlix Company, guided the entrepreneurs on how factoring helps in increasing exports and reducing risks.

Chamber of Commerce President Ramesh Vaghasia welcomed everyone in the seminar. “Indian exporters are facing constraints on multiple fronts, such as lack of trade credit, tough bargaining by buyers for deep discounts, default in payments and rising costs or lack of credit insurance,” he said. This leads to extended payment cycles and accumulation of excessive inventory. The share of external finance in the trade finance of large companies in India is about 11 percent. In the case of SMEs this ratio is almost double i.e. 20 percent.

India represents more than half of the short-term liabilities of businesses and one-third of the total liabilities of all companies. In which about 60 per cent of all international trade transactions are financed through trade credit, he explained in detail about the benefits of factoring business.

Pramit Joshi, senior director of Credlix Company, said, ‘The government aims to take merchandise exports from 400 crore tonnes to 1000 crore tonnes by the year 2030. Factoring can play an important role in solving this. Factoring acts as a strong chain between the exporter and importer. In which the exporter can get the amount for his product on time. Generally there is an agreement between the exporter and the manufacturing company, according to which after exporting the product the manufacturing company pays the money to the exporter and receives the amount for the product from the importer.

According to Global Factoring 2022 data, countries where exporters are using factoring more have higher export volumes. An important reason behind this is the financial security that people get through factoring. China exports 576 billion Euros through manufacturing, while America exports 100 billion Euros and India exports only 15 billion Euros through manufacturing.

Giving information about the benefits of factoring, he said that the factoring company guarantees that the seller will get the money. Since the entire process of documentation is digital, there is no wastage of time. The exporter is invoiced for 90 percent of the bill of lading.