Question

What distinguishes "Factoring" from "Reverse Factoring" on the TReDS platform?

If MSME seller creates it, the process is called factoring if the same is created by corporates or other buyers, it is called reverse factoring.

A Factoring involves fund-based credit, while reverse factoring involves non-fund-based guarantees.

B Factoring is permitted only for government departments, while reverse factoring is for NBFCs.

C Factoring deals with book debts older than 90 days, while reverse factoring deals with insured stocks.

D Factoring is initiated when the MSME seller creates the FU; Reverse Factoring is initiated when the corporate or other buyer creates the FU.

E Factoring is executed without recourse, whereas reverse factoring always requires collateral from the seller.

More Financial Management Questions

🎓

Think You're Ready for RBI Grade B?