UNIVERSITY OF MUMBAI

(V SEMESTER)

T.Y.B.B.I

A PROJECT ON

FACTORING

ACADEMIC YEAR

2016-2017

SUBMITTED BY

MISS. SHIVANGI SURINDER GARG

PROJECT GUIDE

PROF. SHWETA PANDEY

MALINI KISHOR SANGHVI COLLEGE OF COMMERCE AND

ECONOMICS

VILE PARLE (WEST)

MUMBAI 400 049

 DECLARATION

I, MISS. SHIVANGI SURINDER GARG, of MALINI KISHOR SANGHVI

COLLEGE OF COMMERCE AND ECONOMICS, Studying Bachelors Of

Banking and Insurance (Semester V), declare that I have completed this project

on the FACTORING in the academic year 2016-2017. The information

submitted is true and original to the best of my knowledge.

Date of submission Signature of Student

(Miss. Shivangi Surinder Garg)

 CERTIFICATE

This is to certify that MISS. SHIVANGI SURINDER GARG of MALINI

KISHOR SANGHVI COLLEGE OF COMMERCE AND ECONOMICS
Studying Bachelors Of Banking and Insurance (Semester V), has completed
this project on the FACTORING in the academic year 2016-2017. The
information submitted is true and original to the best of my knowledge.

_____________________ ________________

Signature of Principal Signature of Project Guide

(DR. KRUSHNA GANDHI) (PROF. SHWETA PANDEY)

_________________ ________________

COLLEGE SEAL Signature of BBI coordinator

(PROF. SHWETA PANDEY)

_________________

Signature of external examiner

 ACKNOWLEDGEMENT

It has always been my sincere desire as a finance student to get an opportunity to

express my views, skills, attitude and talent in which I am proficient. A project is
one such avenue in which a student who aspires to be a future manager does
something creative. This project has given me the chance to get in touch with the
practical aspects of finance.

I am extremely grateful to the University of Mumbai for having prescribed this

project work to me as a part of the academic requirement in the Bachelors of
Banking and Insurance (BBI) course.

I wish to appreciate the management and the staff of Malini Kishor Sanghvi
College of Commerce and Economics, BBI for providing the entire state of the art
infrastructure and resources to enable the completion and enrichment of my
project.

I would like to thank my parents for the contribution of their knowledge and
patience towards me while I was working on my project.

I wish to extend a special thanks to my project guide Prof. Shweta Pandey

without whose guidance, the project may not have taken shape.
 EXECUTIVE SUMMARY

Factoring is a method used by a firm to obtain Cash when the available Cash
Balance held by the firm is insufficient to meet current obligations and
accommodate its other cash needs, such as new orders or contracts. The use of
Factoring to obtain the Cash needed to accommodate the firm's immediate Cash
needs will allow the firm to maintain a smaller ongoing Cash Balance. By reducing
the size of its Cash Balances, more money is made available for investment in the
firm's growth. A company sells its invoices at a discount to their face value when it
calculates that it will be better off using the proceeds to bolster its own growth than
it would be by effectively functioning as its "customer's bank."

Accordingly, Factoring occurs when the rate of return on the proceeds invested in
production exceed the costs associated with Factoring the Receivables. Therefore,
the tradeoff between the return the firm earns on investment in production and the
cost of utilizing a Factor is crucial in determining both the extent Factoring is used
and the quantity of Cash the firm holds on hand.

Many businesses have Cash Flow that varies. A business might have a relatively
large Cash Flow in one period, and might have a relatively small Cash Flow in
another period. Because of this, firms find it necessary to both maintain a Cash
Balance on hand, and to use such methods as Factoring, in order to enable them to
cover their Short Term cash needs in those periods in which these needs exceed the
Cash Flow. Each business must then decide how much it wants to depend on
Factoring to cover short falls in Cash, and how large a Cash Balance it wants to
maintain in order to ensure it has enough Cash on hand during periods of low Cash
Flow.
 INDEX

Serial Topic Page No

No

1. Introduction 1

2. Factoring Services In India 8

3. Characteristics, Objectives, Features, 25

Functions And Importance Of Factoring

4. Types And Process Of Factoring 34

5. Advantages And Disadvantages Of 39

Factoring

6. Factoring VS Discounting 42

7. Factoring VS Forfeiting 43

8. List Of Factoring Service Companies In 44

India

9. Bibliography 52