Meaning of life Essay Example for Free

Meaning of life Essay Philosophy is â€Å"the study of ideas about knowledge, truth, the nature and meaning of life, etc†¦; a particular set of ideas about knowledge, truth, and meaning of life; and a set of ideas about how to do something or how to live† (Philosophy, 2014, para. 1). Philosophy plays a huge role in all of our lives. Studding of philosophy influences our lives in many ways and has many purposes. Philosophy has five major branches metaphysis, epistemology, ethics, aesthetics, and logic. Each of these branches plays a role with culture to develop thoughts in human beings by wondering, a dynamic  process, the truth, and wisdom. â€Å"Philosophy is an attempt to reason clearly and critically about all areas of experience: science, religion, art, politics, and mortality† (What is Philosophy, Para, 1). The purpose of philosophy is to try to understand and evaluate our most basics, beliefs, values, and to integrate them into a coherent view of each of us and the world around us (What is Philosophy, 2014). Studying philosophy is important because it continues to play an important role in shaping the future of all human existence, Philosophy enhances personal growth,  professional opportunities, improves reading skill, critical thinking, communication, and helps in arguments by showing your philosophical knowledge (What is Philosophy, 2014). There are five major basic branches of philosophy. The branches are the metaphysics, epistemology, ethics, aesthetics, and logic. The metaphysics branch is the study of existence. For example, a few questions one might ask them self would be PHILOSOPHY 3 what else is out there, why I am here, and what is my purpose in life (Important of Philosophy, 2014). Epistemology branch is the study of knowledge. Individuals like to know as much as possible to help their selves understand what is going in life and around then. For example, a question one might ask their selves would be how I know about certain things. In philosophy, knowledge is looked at as factual senses, and not just guesses. People that are epistemology rather use statements and questions in factual form, such as, dogs are mammals (Important of Philosophy, 2014). Ethic branch is the study of actions. This is the branch of philosophy that helps the decision making in what is right and what is wrong; beliefs and values. An example of ethics is your conscious. On one side there is the devil telling you to do the wrong thing, and the angel on the other side telling to do the right thing. Many ethical people try to avoid judgment, but have high moral beliefs in specific things. Ethics also plays a role in religion and faith (Important of Philosophy, 2014). The Aesthetics branch (also known as politics) is the study of action. This is the branch that shoes what actions are permissible. An example, would be how politics work in the world. What laws should be made, and how they should come to be. Politics are the ethics that are applied to people based off what they are told to do or believe (Important of Philosophy, 2014). Finally, the last branch of philosophy is logic or esthetics. This is the study of art. The main question is what can life be like? This is the branch that allows mankind to see the world in an abstract way. According to Importance of Philosophy (2014) PHILOSOPHY 4 Esthetics is important because it delves into the reason why art has always existed, the burning need of mankind through the ages to see the world in a different, clear way it  further evaluates art by the standards of human life, and whether it accomplishes the job of satisfying man’s intellectual needs, or whether it tends to hurt or make worse those needs (Para. 3). Esthetics is bringing the emotion and idea together to make a decision (Important of Philosophy, 2014). Within all the branches there are arguments, these arguments helps in philosophy to create creative thinking and growth. We all have questions, and beliefs to the meaning of life, and we will continue to argue trough ethnic, logic, politics, and beliefs. Each of the five basic philosophy groups have to face basic arguments, These  arguments are structure of arguments, evaluating arguments, types of arguments, and informal fallacies (Chaffee, 2013). The structure of arguments includes: reason, reason, and conclusion. Evaluating arguments include truth of reason, validity of structure, and soundness of argument. There are two types of arguments deductive: conclusion follows necessarily from premises (reasons), and inductive: conclusion supported by premises to some degree. Finally, there are informal fallacies, these are unsound arguments that appeal to emotion and prejudice (Chaffee, 2013). Philosophy and culture interact to develop thought because there are so many different beliefs in the word. Philosophy is love and wisdom, while in culture there is so much hate. The more we talk about our beliefs, and talk out the way we each feel it creates creative thinking, and more open minds. For example, scientist see things one PHILOSOPHY 5 way, but when we are more philosophical it shows us that there are more than one answer to each question. Science believes in evolution, religions believe in god, while the rest of us are still trying to find the meaning of life. When it comes to me, I think ethics represents me the most. I believe in right and wrong, and I have faith. I believe that taking actions against wrong in the world is very important. In our culture, there is so much hate, and I am a very big advocate for equality. I fight for equality for all humans, and I also fight for the rights of animals. Philosophy is â€Å"the study of ideas about knowledge, truth, the nature, and meaning of life (Philosophy, 2014, para. 1). There are five major basic groups, and there will always be questions to create creative thinking, and open minds. Philosophy has  been around from the beginning of time, and will be around until the end of time. We will always want to know the meaning of life and why we exist. PHILOSOPHY 6 References: Chaffee, J. (2013). The philosopher’s way: Thinking Critically about Profound Ideas (1st Ed,). Pearson Education, INC. Importance of Philosophy. (2014). Retrieved from http://www. importanceofphilosophy. com/FiveBranchesMain. html Philosophy. (2014). Retrieved from http://www. merriam- webster. com/dictionary/philosophy What is Philosophy? (2014). Retrieved from http://www. etsu. edu/cas/philosophy/whatis. aspx.

The Purpose and Nature of Architecture Essay -- Design Architecture

The Purpose and Nature of Architecture What is it that we mean when we say ‘the architecture of the city’? What are cities planned to be? Why should we plan anything? When we plan ahead, we perhaps have a goal in mind. What is this goal, for an architect or an urban designer? Simply putting it, their goal is to make environments in which man can live in ways better than he could before. Right from the early times, when shelter meant only a roof over ones head, or when taking shelter meant seeking protection inside a cave or getting under the tree cover, man sought to improve his living conditions. He sought shelter that was more comfortable than the one he had before. From caves and trees, man moved to mud huts and animal skin tents. Constantly striving towards improvisation to suit his changing needs, he has today, shelter in the form of buildings in brick and concrete, that he has termed architecture; gardens and malls where he spends his leisure time, these along with the buildings and the spaces between, he calls urban fabric. There are road networks, that link buildings to each other, buildings to public plazas, that link living areas to work areas, or living areas to educational areas, or living areas to shopping areas. Man has first fragmented his lifestyle and living spaces, then attempted to join it with roads. What he fragments, often stays fragmented forever. Life for him is still a series of experiences which he sometimes can see as a whole but often not. What was once upon a time harmonious living, is divided up into neat compartments with supposedly greater efficiency. Today, we have intelligent buildings that have automated functions. But, what is the sequence of experiences one can have within these buildings? Does that matter or not at all? Are they experiences that satisfy human nature or is it a contrived environment that is far removed from the real world? Do experiences generated by this new architecture, by this new urban design, by this new city planning still inspire man to think and to feel? Does it make him grow, or does it strangulate his sense of being? As an architect or urban designer, must one know all about space and form and structure and nothing about life's experiences, about feeling, about nature? How does an architect or urban designer know about all of life's experiences? Is it... ... parts. I believe that research into the phenomenon of architectural experience and its possible objectification is the spring board towards a more vibrant and humane built environment. We must know if the design processes we employ are the same as the thought processes we undergo whilst experiencing these urban spaces that we design. We must know, which experiences we enjoy the most, how these experiences come about and if the designer must play a role in making these happen, where must he begin? . For example, in our country ,India, there is a lot that is fragmented and that comes together randomly to form a whole which is so much more rich in nature than a putting together in an orderly fashion, of uniform, standardized parts. The study of the experience of architecture I think is the spring board to the creation of more vibrant and humane environments. We must know if the design processes we employ are the same as the thought processes we undergo whilst experiencing these urban spaces that we design. We must know, which experiences we enjoy the most, and how these experiences come about and if the designer must play a role in making these happen, where must he begin?

Coconut Oil Essay

The United States Food and Drug Administration, World Health Organization, International College of Nutrition, the United States Department of Health and Human Services, Â  American Dietetic Association, American Heart Association, British National Health Service, and Dietitians of Canada recommend against the consumption of significant amounts of refined/hydrogenated coconut oil due to its high levels of saturated fat. Advocacy against coconut and palm oils in the 1970s and 80s due to their perceived danger as a saturated fat caused companies to instead substitute trans fats, unaware of their health-damaging effects. Coconut oil contains a large proportion of lauric acid, a saturated fat that raises blood cholesterol levels by increasing the amount of high-density lipoprotein (HDL) cholesterol that is also found in significant amounts in laurel oil, palm kernel oil (not to be confused with palm oil), human and animal breast milk and sebaceous gland secretions. This may create a more favourable blood cholesterol profile, though it is unclear if coconut oil may promote atherosclerosis through other pathways. Because much of the saturated fat of coconut oil is in the form of lauric acid, coconut oil may be a better alternative to partially hydrogenated vegetable oil when solid fats are required. Â  In addition, virgin coconut oil is composed mainly of medium-chain triglycerides, which may not carry the same risks as other saturated fats. Early studies on the health effects of coconut oil used partially hydrogenated coconut oil, which creates trans fats, and not virgin coconut oil, which has a different health risk profile. A repellent made from coconut oil can be used to prevent tungiasis-causing sand fleas from invading the body.

The results of Factoring in Finance Management - Free Essay Example

Sample details Pages: 14 Words: 4071 Downloads: 4 Date added: 2017/06/26 Category Finance Essay Type Analytical essay Did you like this example? This involves the sale at a discount of accounts receivable or other debt assets on a daily, weekly or monthly basis in exchange for immediate cash. The debt assets are sold by the exporter at a discount to a factoring house, which will assume all commercial and political risks of the account receivable. In the absence of private sector players, governments can facilitate the establishment of a state-owned factor; or a joint venture set-up with several banks and trading enterprises. Don’t waste time! Our writers will create an original "The results of Factoring in Finance Management" essay for you Create order Factoring is a financial option for the management of receivables. In simple definition it is the conversion of credit sales into cash. In factoring, a financial institution (factor) buys the accounts receivable of a company (Client) and pays up to 80%(rarely up to 90%) of the amount immediately on agreement. Factoring company pays the remaining amount (Balance 20%-finance cost-operating cost) to the client when the customer pays the debt. Collection of debt from the customer is done either by the factor or the client depending upon the type of factoring. We will see different types of factoring in this article. The account receivable in factoring can either be for a product or service. Examples are factoring against goods purchased, factoring for construction services (usually for government contracts where the government body is capable of paying back the debt in the stipulated period of factoring. Contractors submit   invoices to get cash instantly). HOW FACTORING IS DONE? How it works Client deliver goods / services to the customers and issue an invoice Client sell invoice to a financial institution (factoring company), who immediately advances the 1st installment. This will be between 70% and 90% of the gross value of the invoice. Client usually receives the advance in as little as 24 hours. The sale of the receivables essentially transfers ownership of the receivables to the factor, indicating the factor obtains all of the rights and risks associated with the receivables. Accordingly, the factor obtains the right to receive the payments made by the debtor for the invoice amount and must bear the loss if the debtor does not pay the invoice amount After 30 to 60 days, the invoice is paid by the customer and the factoring company advances you the remaining funds as a 2nd installment, less a small financing fee. Let us see how factoring is done against an invoice of goods purchased:- FACTORING IN HSBC Factoring combines sales-linked finance, bad debt protection, payment collection and transmission services that helps business to compete with the local supplier on equal trading terms. Simply, if a business is trading with another business on open account credit terms, HSBC Factoring Services has the potential to help grow business sales, speed up cash flow, collect payment on invoices and, in selected cases, even protect business from the risk of bad debt. Factoring is a financial transaction whereby a business sells its accounts receivable (i.e., invoices) to a third party (called a factor) at a discount in exchange for immediate money with which to finance continued business. The receivable is essentially a financial asset associated with the debtors Liability to pay money owed to the seller (usually for work performed or goods sold).Factorings rationale includes the financial task of advancing funds to smaller rapidly growing firms who sell to larger more creditworthy organ izations. CHARACTERISTICS OF FACTORING Raise Cash instantly Factoring enables you to raise instant cash against your invoices. HSBC can pay up to 90% of the value of eligible invoices within a day of submission of invoice and the delivery documents.  No Collateral Security required No Collateral Security needed to avail finance. You pay interest only on the actual funds utilization in your account.  Concentrate on your core business The more your sales book grows, the more well help you to turn your invoices into cash. This will enable you to respond more quickly to market opportunities. Collection of receivables is also managed by HSBC enabling you to concentrate on your core business activities.  Optimize your Cash flows Avoid the hidden costs associated with providing extended credit for your customers. Improved cash flows can help you to negotiate competitive purchase terms with your suppliers. You can also choose additional services from our offering including our Credit Protection#  service to protect yourself from bad debts that may arise. 5. Period Usually the period for factoring is 90 to 150 days. Some factoring companies allow even more than 150 days. 6. Costly source of finance Factoring is considered to be a costly source of finance compared to other sources of short term borrowings. 7. Credit risk is analysed Credit rating is not mandatory. But the factoring companies usually carry out credit risk analysis before entering into the agreement Other features:- Factoring is a method of off balance sheet financing. Cost of factoring=finance cost + operating cost. Factoring cost vary according to the transaction size, financial strength of the customer etc. The cost of factoring varies from 1.5% to 3% per month depending upon the financial strength of the clients customer. Indian firms offer factoring for invoices as low as 1000Rs For delayed payments beyond the approved credit period, penal charge of around 1-2% per month over and above the normal cost is charged (it varies like 1% for the first month and 2% afterwards). Bad debts will not be considered for factoring. Factoring receivables is an ideal financial solution for new and emerging firms without strong financials. This is because credit worthiness is evaluated based on the financial strength of the customer (debtor). Hence these companies can leverage on the financial strength of their customers. Eligibility Criteria Reserve Bank of India in its notification dated 12th February 2008, has permitted banks to extend financial assistance to support the factoring business of Factoring Companies which comply with the following criteria: a) The companies carry out all the components of a standard factoring activity, viz., financing of receivables, sale-ledger management and collection of receivables. b) They derive at least 80 per cent of their income from factoring activity. c) The receivables purchased/financed, irrespective of whether on with recourse or without recourse basis, form at least 80 per cent of the assets of the Factoring Company. d) The assets/income referred to above would not include the assets/income relating to any bill discounting facility extended by the Factoring Company. e) The financial assistance extended by the Factoring Companies is secured by hypothecation or assignment of receivables in their favour. As per the existing guidelines, bills discounted / red iscounted by NBFCs (which is deemed to include any other mode of financing of receivables of the borrowers), except those arising from sale of certain types of vehicles, are not eligible for bank finance. Further, the unsecured loans extended by the NBFCs to other companies are also ineligible for bank finance. HSBC CRITERIA: The entity should be in operation for the last 3 years The entity should have generated profits during the last 2 years and should satisfy our internal credit parameters. The concern must have a positive tangible net worth. Factoring Solutions are offered to the following type of concerns Sole Proprietorships Partnerships Private Limited Companies SOLE PROPRIETORSHIP 1. Proof of identity of the Sole Proprietorship Firm (any one of the following): Sales/VAT/Service tax/Excise registration  OR Registration under Shops and Establishment Act  OR PAN Card/IT Return of the concern  OR Water/Electricity/Municipal tax bill in the name of the concern  OR MAPIN Card in the name of the concern 1. Proof of individual identity to be submitted for the sole proprietor (any one of the following): Passport  OR Photo PAN card  OR Voters Identity card  OR MAPIN Card  OR Driving License 1. Proof of Residence Address of sole proprietor (any one of the following): Passport  OR Voters ID  OR Driving License  OR Ration Card  OR Society outgoing bill  OR Life Insurance Policy  OR Electricity bill  OR Telephone (Land/Mobile) Bill 2. PAN Card/PAN allotment Letter/Form 60 of the concern Only Passport can be used as both Proof of Identity and Proof of Residence. PARTNERSHIP FIRM 1. Proof of identity of the Partnership firm (any one of the following): Sales/VAT/Service tax/Excise registration  OR Registration under Shops and Establishment Act  OR PAN Card/IT Return of the concern  OR Water/Electricity/Municipal tax bill in the name of the concern  OR MAPIN Card in the name of the concern 1. Proof of individual identity to be submitted for all partners (any one of the following): Passport  OR Photo PAN card  OR Voters Identity card  OR MAPIN Card  OR Driving License  1. Proof of residence address to be submitted for all partners (any one of the following): Passport  OR Voters ID  OR Driving License  OR Ration Card  OR Society outgoing bill  OR Life Insurance Policy  OR Electricity bill 2. Partnership Deed: Partnership deed is required  3. PAN Card/PAN allotment Letter/Form 60 of the concern PRIVATE LIMITED COMPANY 1. Proof of identity of the Private Limited Company (any one of the following): Sales/VAT/Service tax/Excise registration  OR Registration under Shops and Establishment Act  OR PAN Card/IT Return of the concern  OR Water/Electricity/Municipal tax bill in the name of the concern  OR MAPIN Card in the name of the concern  2. Memorandum Articles of Association  3. Certificate of Incorporation  4. Board Resolution  5. Copy of annual return establishing the shareholding pattern  Proof of individual identity to be submitted for all the authorized signatories, all principal shareholders (with more than 10% shareholding) and at least 2 Directors (including the Managing Director) 1.Any one of the following- Passport  OR Photo PAN card  OR Voters Identity card  OR MAPIN Card  OR Driving License  2. List of Directors  3. Copy of Form 32 filed with ROC  4. PAN Card/PAN allotment Letter/Form 60 of the concern  ADDITIONAL DOCUMENTS REQUIRED: Pre Approval Profit Loss and Balance Sheet for the last three years audited by a C.A. Information on projected sales to the customers.  Post Approval Personal guarantee of the promoter directors along with their certified net worth statements is to be provided. Net worth statements of the promoter directors. Letter of disclaimer from existing charge holders for the factored debt*. Letters to be sent to your customers by you instructing them to route payments through HSBC**. Demand promissory note in favour of HSBC. Board resolution of the company or Partnership letter or declaration from the sole proprietor providing a list of authorized signatories. Execution of a Factoring agreement and acceptance of terms detailed in the Facility Advice Letter. Power of Attorney in favour of HSBC. TYPES OF FACTORING A) Recourse Factoring and Non Recourse Factoring. B) Disclosed Factoring and Undisclosed Factoring. C) Full Factoring and Limited Factoring. D) Bulk Factoring. E) Maturity Factoring. F) Channel Factoring. RECOURSE FACTORING: In recourse factoring, client undertakes to collect the debts from the customer. If the customers dont pay the amount on maturity, factor will recover the amount from the client. This is the most common type of factoring. Recourse factoring is offered at a lower interest rate since the risk by the factor is low. Balance amount is paid to client when the customer pays the factor. NON RECOURSE FACTORING: In non recourse factoring, factor undertakes to collect the debts from the customer. Balance amount is paid to client at the end of the credit period or when the customer pays the factor whichever comes first. The advantage of non recourse factoring is that continuous factoring will eliminate the need for credit and collection departments in the organization. DISCLOSED FACTORING: In disclosed factoring clients customers are notified of the factoring agreement. The buyer is informed that the third party (the factoring company) is party to. The buyer is asked to make payment to factor on due date. UNDISCLOSED FACTORING: In undisclosed factoring, clients customers are not notified of the factoring arrangement. Sales ledger administration and collection of debts are undertaken by the client himself. Client has to pay the amount to the factor irrespective of whether customer has paid or not. But in disclosed type factor may or may not be responsible for the collection of debts depending on  whether it is recourse or non recourse. FULL FACTORING: It is made up of all the factoring services finance, sales ledger administration, collection, credit risk cover and the arrangement is fully notified to the buyers. LIMITED FACTORING: The factors choose limited number of invoices to be subject of factoring agreement with the clients. BULK FACTORING: This type of factoring is basically used as a method of financing book debts. Under this the client continues to administer credit and operate sales ledger. The factor finances the book debts against bulk either on recourse or without recourse. This sort of factoring became popular with the development of mini-computers market where marketing and credit management was not a problem but the firms needed temporary financial accommodation. Those companies which have good systems of credit administration, but need finances, prefer this form of factoring. MATURITY/ COLLECTION FACTORING: It can be best described as a full service factoring without finance. Because finance is not offered the security requirements of the factor are quite different. The risk lies only in the credit cover provided on the underlying buyers. There is no seller risk. For the same reason there is no finance charge and the factor takes his remuneration only from the commission fee. The factor pays the seller for the A/R in one of two ways: 1. After an agreed period from invoice date, for example 60 days. This is known as the maturity period. The benefit of this method is that the seller knows exactly when he will be paid and so can plan his cash flow accordingly; or 2. On receipt of payment from each buyer or on the insolvency of the buyer provided that the buyer is credit covered. This is known as the pay when paid method. To benefit from this service the seller will have adequate sources of finance elsewhere and is looking to the factor to strengthen a weak administration or m aybe reduce overheads and provide protection. CHANNEL FACTORING: Channel Financing enables clients to discount their receivables on account of supplies made to their dealers within pre-defined limits. Payment is received from the dealer on the due date. It ensures immediate realization of sales proceeds for clients, making it practically a cash sale. On the other hand, the dealer gets credit for a pre decided tenor sanctioned by us, enabling smooth liquidity management .An advance of up-to 95% of the invoice value/ bill value can be provided. Collection of receivables and Maintenance of accounts relating to accounts receivables REVERSE FACTORING: Reverse factoring is the discounting of suppliers bills in respect of the clients regular purchases from them. Only regular suppliers of the client, having a relationship of minimum 6 months, are considered. Advance of up-to 100% of the Invoice value/Bill value can be provided to the supplier. Credit is given of around 120 days Types of factoring solutions provided by HSBC HSBC provides finance solutions for all your sales and purchase requirements on the domestic front, and various export-factoring product services on the international level. Our factoring services offer a comprehensive receivables and payables management solution which includes transaction financing, credit protection, sales ledger administration and payment collection. INTERNATIONAL FACTORING: It includes comprehensive receivable management service encompassing finance, credit protection, collection and sales ledger management for exports on open account terms. An advance up to 95% of the invoice value can be provided. It covers the credit default risk. L/Cs from foreign buyers are not required. There is no recourse on the client. In this there are usually two factors. The export factor looks at financing the exporter and sales administration (presenting invoices at the right time, collecting payments being the key tasks). The import factor is interested in evaluating the buyer, collecting the money on time at the same time ensuring that he is protected against default. It encompasses all the four services, that is, pre-payments, sales ledger administration, credit protection and collections. Step Guide to International Factoring: The importer places the order for purchase of goods with the exporter. The exporter requests the Export Factor for limit approval on the importer. Export Factor in Turn forwards this request to an Import Factor in the Importers country. The Import Factor Evaluates the Importer and conveys its approval to the Export Factor who in turn conveys Commencement of the Factoring arrangement to the Exporter. The exporter delivers the goods to the importer. Exporter produces the documents to the Export Factor. The Export Factor disburses funds to the Exporter upto the prepayment amount decided and at the Same time the forwards the documents to the Import factor and the Importer. On the due date of the invoice, the Importer pays the Import Factor, who in turn remits this Payment to the Export Factor. The Export Factor applies the received funds to the outstanding amount of the advance against The invoice. The exporter receives the balance payment. In the international product suite, apart from the existing export-factoring product, we are now poised to launch import factoring as well. That will make us the first and only Bank offering the entire bouquet of factoring products to customers in India. DOMESTIC FACTORING: Domestic factoring provides funding against invoices raised on customers within India. In addition to this, HSBC also takes care of ledger management. Credit protection is also offered as an optional service feature. Steps to avail Domestic Factoring Field survey of your sales ledgers Credit assessment of your company Setting of Credit limits for each of your customers Signing of factoring agreement between you and HSBC Your customers accept to route all payments through HSBC Post delivery of goods, forward copies of invoices and supporting documents to HSBC You can draw prepayments up to the agreed limit INVOICE FACTORING: Invoice Factoring is an alternate solution to domestic factoring, if you would like to avail financing against your accounts receivables, but would like to continue managing collections. The steps involved are the same, as domestic factoring except you to need not inform your customers about the arrangement with HSBC. Your customers would continue to pay directly to you. HSBC would not be responsible for collections of the proceeds. As soon as your customers make the payments, you would have to remit the payment to HSBC. EXPORT FACTORING: Export factoring provides immediate financing against your export receivables. Financing can be availed in Rupees or in foreign currency. We offer Credit protection for your export receivables. As part of the full service package, we also offer Sales Ledger Management wherein we handle all your ledger administration and collection jobs through our overseas factor partners, to save you, both time and overhead costs. Steps to avail Export Factoring: Field survey of your sales ledgers Credit assessment of your company Setting of Credit limits for each of your overseas customers Signing of factoring agreement between you and HSBC Post shipping of your goods, forward copies of invoices and supporting documents to HSBC You can draw prepayments up to the agreed limit Under HSBCs supervision, an overseas factor partner collects and transfers payments to HSBC FUNCTIONS OF FACTORING: 1. Finance: One of the key elements in the need for additional working capital is the growth in the accounts receivables. In factoring contract the factor agrees 2 pay the seller a substantial proportion of the value of the qualifying accounts receivables as soon as they come into existence. The seller will receive the balance when the factor has collected from the buyer. 2. Accounts receivables ledger administration: The factor takes the sellers buyer accounts onto his books and updates these accounts with all transactions invoices, credit notes, etc. Where appropriate, the factor sends statements to the buyers showing what should be paid to the factor and how this amount is made up. The seller receives regular report on the status of the ledger and so is able to keep fully informed about the performance of his buyers. 3. Collection of the accounts receivables: One of the problems with the open account payment is that there is no automatic means of initiating payment from buyer as one would find with an accepted bill of exchange, for eg. the factors administration system. Therefore, is designed to prompt the buyers for payment systematically by letter and to give the collection staff he necessary information to seek payment from the buyer by telephone when necessary. In cases of serious delay legal action will have to be taken. If an accounts receivables is credit covered, the cost of this legal action will usually be borne by the factor. 4. Credit cover: If the buyer defaults in his payment, the factor will pay the seller normally 100% of the credit covered accounts receivables when: The buyer is insolvent (as defined in the contract). The accounts receivable is (are) 90 days past the due date on the invoice. This period may vary in a domestic contract some factors do not have a guarantee period in their contracts but simply pay if and when the buyer becomes insolvent, as defined in the factoring contract At present credit protection is being offered only for EXPORT deals through Two Factor arrangements. BENEFITS OF FACTORING: Benefits of Factoring 1) Flexible finance enables you to accept new orders with confidence. 2) Available funds can help to give you greater buying power with your suppliers. 3) It helps you avoid the dangers of over-trading. Your funding keeps pace with your sales setting up new limits and reviewing those in place is now quicker and easier 4) Based on sales invoices, additional fixed asset security is not normally required. 5) Protects your profits and cash flow against the ever-present trade credit dangers of bad debt (with pre-approved individual debtor limits). 6) It helps to release additional time and resources (from chasing and processing payments) enabling you to concentrate on your core business activities. 7) Our international factoring correspondents across the globe have country specific knowledge and can correspond with your buyers in their own language. Other Benefits: Collateral Free. Higher pre-payment % ensuring more finance available. Helps the client to take a credit decision on buyer. Generates cash as soon as the delivery of goods is completed. Value added services like collection / ledger management. Reduces the costs of collections. COMPARISON OF BILL DISCOUNTING AND FACTORING BILL DISCOUNTING FACTORING 1. Individual Transaction. 1. Limit Set on turnover basis. This also gives the client the liberty to draw desired finance only. 2. Each bill has to be individually accepted by the drawee. This takes time. 2. A onetime notification is taken from the customer at the commencement of the facility. 3. Stamp duty is charged on certain usance bills together with bank charges. 3. No stamp duty is charged onthe invoices. No charges other than the usual finance and service charge. 4. Grace period for payment is usually 3 days. 4. Grace period of 30 days. 5. Original documents like LR, RR and Bill of Lading are to be submitted. 5.Only copies of such documents are necessary. 6. Charges are normally up front. 6. No upfront charges. Finance charges are levied on only the amount of money withdrawn with monthly rests. BENEFITS OF FACTORING OVER CASH CREDIT CASH CREDIT FACTORING 1. Margin retained on receivables are usually 40-50% 1. Margin usually retained is 15%. 2. Limits computed based on historical data. 2. Limits computed based on projected turnover basis. 3. The client has to submit various statements / stock statements etc to thebank 3. No statement to be given. On the contrary we furnish various reports to both the client and the customer 4. No collection services performed for the clients. 4. One of the functions of the factor is debt collection 5.No Value added services like Sales Ledger Maintenance and Credit Protection provided 5. It provides all these services 6. Collateral security required 6. It is collateral free. SUITABILITY FOR FACTORING SERVICE (HSBC) Open account/Credit Sales. Defined Trade Terms. Ongoing Transaction with established track record. No two way trading. No restriction on Assignment of Debts. The buyer is not a Group/Associated Company. The product is not a capital good. Free from Warranties/Indemnities. CLIENT ELIGIBILITY CRITEREA Minimum Turnover INR 100 M. Positive PAT and TNW for last two years. I.T. Returns have been filed for last 2 years. Not on RBI Defaulters List and HUB Blacklist. The promoters are not on NMAS / MCNF / CIBIL checklist. Gearing less than 4 and Leverage less than 6. Minimum of 5 factorable debtors required for a deal. FACILITY STRUCTURE Parameter Cap Value Minimum Fund in use Limit INR 10 M Maximum Fund in use Limit INR 50 M Maximum Trade Term 120 Days Margin Higher of 15% or 2X historic dilution Concentration % 30% (50% for the first 2 months) Notice of Assignment Required (Prior to disbursement) Letter of Disclaimer Required Turnover through HSBC 100%