Frequently asked questions
Overview
Answers are written so the first sentence stands alone. Where a figure is company-specific (advance rate, pricing, tenor, corridors), the exact number depends on the buyer, the invoice and credit approval — this page tells you the structure, not a quote.
What export factoring is
What is export factoring?
Export factoring is the sale of an exporter’s unpaid overseas invoices to a finance provider in exchange for an upfront cash advance, with the balance released — less charges — once the overseas buyer pays. The exporter gets paid on shipment or invoicing rather than 60–120 days later when the buyer settles. The finance provider takes on the job of tracking and collecting the invoice; depending on the structure, it may also take on some or all of the risk that the buyer never pays.
How is export factoring different from a bank loan?
Export factoring advances cash against a specific invoice you are selling, not against your general creditworthiness or collateral, the way a bank term loan or working capital loan does. A bank loan sits on your balance sheet as debt and is typically sized against your fixed assets, turnover or existing banking relationship; factoring is priced and sized against the buyer’s credit quality and the invoice itself, so it can extend credit lines that a bank wouldn’t, especially for exporters who are asset-light or growing fast.
How is export factoring different from bill discounting?
Bill discounting advances cash against a bill of exchange or invoice with recourse to the exporter — if the buyer doesn’t pay, the bank comes back to the exporter for the money, and the exporter typically still carries the credit risk on its own books. Export factoring can be structured the same way (with recourse) or without recourse to the exporter, and it usually bundles in buyer credit assessment, collections and ledger management, which standard bill discounting does not.
How is export factoring different from forfaiting?
Forfaiting is the discounted, non-recourse purchase of a single, longer-tenor trade receivable — usually evidenced by a bill of exchange, promissory note or letter of credit, and often for capital goods or project exports — while factoring typically covers a revolving book of shorter-tenor, open-account invoices. Forfaiting is a one-off transaction per receivable; factoring is an ongoing facility that turns over as new invoices are raised and old ones are paid.
Is export factoring a loan?
No — export factoring is a sale of a receivable, not a loan against it, which is why it is usually treated differently from debt on the exporter’s balance sheet. Because the receivable itself changes ownership, the accounting and disclosure treatment differs from a term loan or overdraft; exporters should confirm the specific treatment with their auditor.
What is recourse factoring?
Recourse factoring means that if the overseas buyer fails to pay the invoice, the finance provider can require the exporter to refund the advance or make good the shortfall. The exporter still carries the ultimate credit risk on the buyer; factoring in this mode primarily solves a cash-flow timing problem, not a credit risk problem.
What is non-recourse factoring?
Non-recourse factoring means that on an eligible invoice, the finance provider — not the exporter — absorbs the loss if the overseas buyer fails to pay because of insolvency or protracted default, subject to the terms of the facility and, where used, the underlying credit insurance policy. Non-recourse is an option available on invoices and buyers that meet eligibility criteria; it is not a blanket feature of every invoice submitted, and it does not cover disputes over the underlying goods or services (a commercial dispute is not a credit default).
Who qualifies and what’s needed
Who qualifies for export factoring?
Exporters shipping goods or services to overseas buyers on open-account or documentary credit terms typically qualify, provided the underlying trade is genuine, the buyer passes credit assessment, and the exporter’s documentation is in order. Mintifi Global works with Indian manufacturers, merchant exporters and services exporters — goods and services exporters are both eligible, subject to the same underwriting on the buyer and the underlying contract; eligibility is confirmed after review of the exporter, the buyer and the specific invoices. Eligibility for non-recourse treatment specifically is assessed per buyer and, in most facilities, per invoice — expect some buyers or invoices to qualify for non-recourse terms and others not to, rather than a single facility-wide switch.
What documents are needed to get started?
At minimum, expect to provide company incorporation and KYC documents, recent export track record (shipping bills, GST returns, bank statements), the export invoice and underlying commercial contract or purchase order, and proof of shipment (such as a bill of lading or airway bill). Additional documents may be requested depending on the buyer, the goods and the corridor.
How long does approval take?
Initial eligibility can typically be assessed within a short review of the exporter and the proposed buyer; the exact timeline depends on how quickly documentation and buyer information are provided and on the outcome of KYC and credit checks. Once a facility is in place, funding against a specific approved invoice is designed to move quickly.
Does my company need a minimum export turnover?
There is no fixed public threshold — eligibility is assessed on the exporter’s trade history, the quality of documentation and the buyer’s credit profile rather than a single turnover cut-off. Smaller or newer exporters with a clean, verifiable trade pattern and a creditworthy buyer can still qualify.
What disqualifies an invoice?
An invoice is typically ineligible if the underlying trade cannot be verified, if it is owed by a buyer who fails credit assessment or is in a restricted market, if it is already pledged or discounted elsewhere, if it is subject to a commercial dispute over the goods or services delivered, or if it falls outside the tenor or documentation standards of the facility. Related-party transactions (buyer and seller under common control) are treated with additional scrutiny — the arm’s-length credit signal that factoring relies on is weaker between related entities — and many facilities exclude them outright; ask directly about your specific buyer relationship before assuming eligibility.
How a deal works
What is a Notice of Assignment (NOA), and does my buyer find out?
A Notice of Assignment is a formal notice sent to the overseas buyer stating that the exporter has assigned the receivable to the finance provider and that payment should now be made to the finance provider’s account. In a standard disclosed (notified) structure the buyer is informed and pays the assignee directly — this is routine in international trade finance, not a signal of financial distress, and many large buyers deal with factored suppliers as a matter of course; in undisclosed (non-notified) structures the buyer continues to pay the exporter’s usual collection account and is not notified, though this is less common and depends on the facility and jurisdiction.
How are buyer credit limits set, and can they change?
The finance provider assesses each overseas buyer’s creditworthiness — using credit reports, trade references, payment history and, where applicable, a credit insurer’s own underwriting — and sets a maximum exposure limit for that buyer; invoices are funded up to that limit, and amounts above it are outside the facility unless the limit is reviewed and increased. A buyer’s limit can also be reviewed, reduced or withdrawn if its financial condition, payment behaviour or country risk changes — invoices already funded before a change are governed by the terms in place at the time, and new invoices are subject to the current limit.
Do you handle multiple currencies, and what about FX movement?
Yes — cross-border export receivables are typically invoiced and settled in foreign currency, and the facility operates in USD as its functional currency from GIFT City IFSC. Exchange rate movement between invoicing, funding and buyer settlement is addressed by the terms of the specific facility rather than left open-ended — some structures fund in the invoice currency to minimise timing mismatch, others address it through pricing — so ask what currency your advance and final settlement will be made in before you factor a given invoice.
What happens at maturity, when the buyer pays?
When the overseas buyer pays the invoice — on its due date or earlier — the finance provider applies the proceeds to recover the advance already paid to the exporter, deducts the agreed charges (calculated to the actual payment date in most facilities), and releases the remaining balance to the exporter. If the buyer pays late, the facility’s terms on late payment — including any recourse position — apply.
Risk and non-payment
What happens if the overseas buyer doesn’t pay?
What happens depends on whether the invoice was funded on a recourse or non-recourse basis. On a non-recourse, eligible invoice, the loss from the buyer’s insolvency or protracted default is absorbed by the finance provider (and, where in place, indemnified in part by a credit insurer) rather than clawed back from the exporter; on a recourse invoice, the finance provider can require the exporter to refund the advance.
Does a credit insurer guarantee I’ll be paid in full?
No — where a credit insurer is used on an eligible non-recourse deal, the insurer typically indemnifies a majority of the insured loss, commonly in the region of 80–90%, not the full invoice value, and payment is subject to the policy’s terms, waiting periods and claims process. Non-recourse cover reduces the exporter’s exposure on eligible invoices; it does not eliminate all risk on every invoice, and it does not cover a genuine commercial dispute over the goods or services delivered.
What’s the difference between buyer credit risk and commercial dispute risk?
Buyer credit risk is the risk that the buyer is willing but unable to pay — insolvency, protracted default, political or transfer risk; commercial dispute risk is a disagreement over whether the goods or services were delivered as contracted — short shipment, quality claims, late delivery. Non-recourse treatment and credit insurance address buyer credit risk, subject to the facility’s terms and exclusions such as fraud or invoices outside the approved buyer limit — “non-recourse” is not a blanket statement that no risk of any kind remains with the exporter. They do not cover a commercial dispute: a genuine dispute over goods or services delivered is generally excluded from non-recourse credit protection and can result in the invoice reverting to the exporter’s recourse until the dispute is resolved, which is why documentation quality (proof of delivery or performance, buyer acceptance) matters at the time of funding.
GIFT City, regulation and structure
What is GIFT City IFSC, and why does it matter for export finance?
GIFT City IFSC (International Financial Services Centre, at GIFT SEZ, Gandhinagar, Gujarat) is a purpose-built financial services jurisdiction within India where trade finance activity is conducted in foreign currency (USD) under a dedicated regulator, the International Financial Services Centres Authority (IFSCA). For an exporter, it means the financing is structured for cross-border, foreign-currency trade from an India-based, India-regulated entity rather than an offshore or unregulated arrangement.
What is Mintifi Global’s regulatory status?
Mintifi Global Finance (IFSC) Private Limited is an IFSCA-registered Finance Company, operating under its Certificate of Registration (CoR) issued by the International Financial Services Centres Authority.
Why finance from an IFSC unit instead of a regular Indian NBFC or bank?
An IFSC unit is built to transact in foreign currency and to serve cross-border trade as its core business, which aligns the entity’s functional currency (USD) with the exporter’s invoice currency and avoids a currency mismatch that a rupee-denominated lender would introduce. It also operates under a dedicated cross-border finance regulatory framework (IFSCA) rather than the domestic banking framework.
Does using export factoring affect my relationship with my existing bank, or my borrowing base?
Factoring a specific invoice or a specific buyer’s receivables does not automatically cancel your other banking facilities, but your bank needs to know — double-financing the same invoice through two lenders is a compliance problem for you, not just an administrative one, and if your bank’s working capital facility is sized against your total receivables (a borrowing base), removing factored invoices from that pool by selling them elsewhere will typically reduce the receivables counted in that base. Tell your bank which invoices and buyers are being factored so your borrowing base certificate stays accurate; some exporters use factoring specifically to supplement bank limits on buyers or tenors their bank won’t cover, rather than to replace the bank relationship.
Costs and closing
What does export factoring cost, how is it priced, and are there hidden charges?
Export factoring is typically priced through a combination of a discount or interest-type charge on the funded amount for the period it’s outstanding, and a service or facility fee that reflects the collections, credit assessment and administration involved — the exact combination and rate depend on the buyer’s credit quality, the tenor, the corridor and whether the invoice is recourse or non-recourse. No standard facility should have charges that aren’t disclosed before funding: the practice is to quote the applicable rate, fees and any conditions for a specific invoice before the exporter accepts the advance, so ask for the full cost breakdown, not just the headline advance rate, before you commit.
How much of my invoice value can I get upfront?
On eligible invoices, an advance of up to 85% of the invoice value is available; the exact percentage for your invoice depends on the buyer, the market and the invoice itself, and is confirmed after review. The remaining balance, less charges, is released once the buyer pays.
Is my data safe with an IFSC finance company?
Exporter and transaction data submitted for assessment is used to evaluate and administer the financing relationship and is handled in line with applicable data protection norms; see Governance & Disclosures for how data protection and complaint handling are structured. If you have a specific data-handling question, raise it directly before submitting sensitive documents.
What if I have a complaint or a dispute with the financing terms?
Complaints are handled through a documented grievance mechanism with an appointed grievance officer; see Governance & Disclosures for the escalation path. Raising a concern early, before an invoice matures, gives the most room to resolve it.