New regulation backs financing for smaller firms
Print Edition
JIADING has launched a regulation on commercial factoring to solve financial problems for local middle and small enterprises.
In the future, Jiading sellers can transfer account receivables to a commercial factoring company, and the company will provide cash to the sellers for further purchases and production. It’s a perfect option to solve the problem of capital turnover, according to business operators.
Financial help
“Many middle and small companies have to compromise when they try to sell goods to big companies,” said Zhang Wei, an official with the Jiading Economic Commission’s financial development division. “If those small companies require payment immediately, they may receive no orders at all.”
Thus, the development of commercial factoring becomes especially important for the finance of those small companies.
““Now every day we receive dozens of calls for consultation of commercial factoring,” Zhang said.
Jiading is the second district in Shanghai to launch commercial factoring after the Pudong New Area. So far, two companies have been approved and can start business, while three others are in the process of being approved.
In the current market, bank factoring is still in the majority. However, Wang Xianyun, CEO of Shanghai Tonghua Commercial Factoring Company, is confident about the potential market.
Confidence in new service
He said customers for bank factoring are mostly big companies, while the target customers of commercial factoring were middle and small enterprises.
Zhang, the official in charge of commercial factoring business in Jiading, says newcomers should try to establish a good foundation at first, especially in risk control. “Commercial factoring companies shall choose business carefully,” he said. “After all, no one wants to take over bad debt.”
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