Export Factoring FAQ: Questions Indian Exporters Ask

Export factoring is the sale of an exporter's unpaid overseas invoices to a finance provider for an upfront advance, and the answers below cover how it works, what it costs to ask about, what risks it addresses and what rules apply. Where a figure is company-specific, the exact number depends on the buyer, the invoice and credit approval: this page explains structure, not a quote.

Key facts

• Export factoring is a sale (assignment) of receivables, not a loan against them.
• An advance, where approved, is set after credit review and under the facility terms; this site publishes no percentage or rate.
• Export proceeds must be realised within the period in the RBI's export regulations: nine months from shipment (goods) or invoice (services), twelve months for rupee-invoiced or rupee-settled exports.
• Mintifi Global Finance (IFSC) Private Limited is an IFSCA-registered Finance Company (CoR FCO2026FNC1142).

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 finance provider usually also tracks and collects the invoice.

How is export factoring different from a bank loan?

A bank loan is lent against your general creditworthiness or collateral. Export factoring advances cash against a specific invoice you are selling, and it is sized mainly on the buyer's credit quality and the invoice. See export factoring in India.

How is it different from bill discounting?

Bill discounting advances cash against a bill of exchange or invoice; whether it is with recourse depends on the bank's terms. Export factoring can be with or without recourse and, depending on the provider, may include buyer credit assessment and collection. See the glossary.

How is it different from forfaiting?

Forfaiting is the discounted, without-recourse purchase of a single, usually longer-dated receivable. Factoring typically covers a flow of shorter-dated open-account invoices on a revolving basis.

Is export factoring a loan?

It is structured as a sale of a receivable rather than a loan. The accounting and disclosure treatment depends on the structure and on your accounting standard, so ask your auditor.

Recourse, risk and non-payment

What is recourse factoring?

Recourse factoring means that if the overseas buyer fails to pay, the provider can require the exporter to refund the advance. The exporter keeps the credit risk.

What is non-recourse factoring?

Non-recourse factoring means that on an eligible invoice the provider, not the exporter, takes the loss if the buyer fails to pay because of insolvency or protracted default. It is assessed buyer by buyer and invoice by invoice, is set out in the facility terms, and never covers a genuine commercial dispute.

What happens if the overseas buyer does not pay?

It depends on whether the invoice was funded with or without recourse. With recourse, the provider can ask you to refund the advance. Without recourse, on an eligible buyer and invoice, the provider takes the credit loss. A commercial dispute over the goods is treated differently: depending on the facility terms, the invoice can be treated as recourse until it is resolved.

Does credit insurance guarantee I will be paid in full?

No. A credit insurance policy pays a percentage of an insured loss according to its schedule and terms. ECGC's Shipments (Comprehensive Risks) policy states a 90% percentage of cover for exporters whose anticipated annual export turnover is above Rs 5 crore and whose projected premium is under Rs 20 lakh, for example. See export credit insurance vs factoring.

What is the difference between buyer credit risk and commercial dispute risk?

Buyer credit risk is the risk that the buyer cannot pay, for example because of insolvency or protracted default. Commercial dispute risk is a disagreement over whether the goods or services were delivered as contracted. Non-recourse treatment and credit insurance address the first, not the second.

How are buyer credit limits set, and can they change?

The provider assesses each buyer and sets a maximum exposure. A limit can be reviewed, reduced or withdrawn if the buyer's condition or country risk changes. See buyer credit limits explained.

Who qualifies, documents and process

Who qualifies for export factoring?

Exporters of goods or services that sell to overseas buyers on open-account or documentary terms typically qualify, provided the underlying trade is genuine, the buyer passes credit assessment and the documentation is in order. Approval is not assured.

What documents do I need?

Company and KYC documents, your Importer-Exporter Code, the invoice, a transport document and shipping bill for goods, and the contract or purchase order. See documents needed for export factoring.

What is a Notice of Assignment?

A notice to the buyer that the invoice has been assigned to the finance provider and where to pay. In disclosed factoring it is routine. See Notice of Assignment explained.

What happens at maturity, when the buyer pays?

The provider applies the buyer's payment to recover the advance, deducts the agreed charges and releases the balance to you.

Cost and advance

How much of my invoice value can I get upfront?

An advance, where approved, is set after credit review of the buyer, the invoice and the underlying trade, under the facility terms. No percentage, rate or fee is published on this site.

What does export factoring cost?

Pricing depends on the buyer's credit quality, the tenor, the structure and whether the facility is with or without recourse. It commonly combines a charge on the funded amount for the time it is outstanding with a service or facility fee. Ask for the full cost breakdown, not just the headline advance rate, before accepting an advance. No rates are published here.

Rules, timelines and structure

How long do I have to realise export proceeds under FEMA?

Under the RBI's Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026, nine months from the date of shipment for goods or from the date of invoice for services, and twelve months where the export is invoiced or settled in Indian Rupees. An Authorised Dealer can extend the period on request if satisfied with the reasons. See export realisation timelines under FEMA.

What is GIFT City IFSC, and why does it matter for export finance?

GIFT City, in Gandhinagar, hosts an International Financial Services Centre (IFSC), regulated by IFSCA. A Finance Company registered there operates in a freely convertible foreign currency and keeps its balance sheet in US dollars, which suits foreign-currency export invoices. See how GIFT City IFSC export factoring works.

What is Mintifi Global's regulatory status?

Mintifi Global Finance (IFSC) Private Limited is an IFSCA-registered Finance Company (CoR FCO2026FNC1142).

Does factoring affect my relationship with my bank?

Factoring a specific buyer's invoices does not automatically cancel your bank facilities, but tell your bank. If a facility is sized against total receivables, factored invoices come out of that pool, and the same invoice must never be financed twice.

What if I have a complaint?

Complaints are handled under a documented grievance process described on the Grievance redressal page.

Sources

• RBI, Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026: rbi.org.in.
• IFSCA (Finance Company) Regulations, 2021, as amended up to 1 July 2022: ifsca.gov.in.
• ECGC Ltd, Shipments (Comprehensive Risks) Policy product sheet: ecgc.in.