From the definition of factoring and financial institutions, factoring companies belong to financial institutions.

Factoring is a full-name guarantee agent, also known as collection guarantee. The seller transfers its current or future accounts receivable based on the goods sales/service contract with the buyer to the factor (a financial institution providing factoring services), and the factor provides it with a series of comprehensive financial services such as financing, buyer's credit evaluation, sales account management, credit risk guarantee and account collection. It is a method that the seller entrusts a third party (the factor) to manage accounts receivable in order to strengthen the management of accounts receivable and enhance liquidity when the payment is settled by collection or credit in commercial trade.

a Financial Institution refers to a financial intermediary institution engaged in financial services, which is a part of the financial system. [1]? Trust, fund and other industries) accordingly.

financial intermediaries also include banks, securities companies, insurance companies, trust and investment companies and fund management companies. ? [2]? At the same time, it also refers to lending institutions, which provide loans to companies whose customers are financially revolving, and their interest rates are relatively higher than those of banks, but it is more convenient for customers to borrow money because there is no need for complicated documents to prove it.

1. factoring services

compared with traditional settlement methods, the advantages of factoring mainly lie in the financing function. The factor provides at least two of the following services:

1. Trade financing

The factor can provide financing to the seller immediately after receiving the assigned accounts receivable according to the seller's capital demand, and help the seller solve the problem of liquidity shortage.

2. Sales ledger management

According to the requirements of the seller, the factor can regularly provide the seller with the collection of accounts receivable, overdue accounts, aging analysis, etc., and send various statements to assist the seller in sales management.

3. Collection of accounts receivable

Factors have professionals engaged in collection, and they will take reasonable, powerful and economical measures according to the overdue time of accounts receivable to help sellers recover accounts safely.

4. credit risk control and bad debt guarantee

the factor can check the credit line for the buyer according to the seller's demand, and provide 1% bad debt guarantee for the accounts receivable generated by the seller's delivery within the credit line.

ii. Classification of factoring

1. Commercial factoring

refers to the factoring business carried out by non-bank factors.

2. Domestic factoring

refers to the factoring business provided by a factor for buyers and sellers in domestic trade.

3. International factoring

refers to the factoring business provided by a factor for buyers and sellers in international trade.

Reference: Baidu Encyclopedia Factoring.