Factoring

Factoring means undertaking a number of complementary services which include a clearance system on the likely buyer (the debtor), evaluating his financial and commercial status and also the management of the deferred accounts and collecting the due ones in its due date or accelerating its repayment according to what is agreed upon.

Whereas it is a contract concluded between the factor and the seller where the company can buy under this contract the short-term monetary rights of the seller without the right to have recourse on him in the case of the debtor bankruptcy and inability to repay, whereas this field is attributed by the international character if one of the parties is abroad.

Factoring according to the executive statutes of the law on Investment Guarantees and Incentives number 8 / 1997

The Factoring company shall meet the following requirements:-

1. Its legal form shall be a joint stock company.

2. Its objective shall be limited on the Factoring activity.

3. The shareholders shall encompass a financial institution.

4. The paid capital shall not  be less than Ten million Egyptian pounds or its equivalent from any foreign currency.

5. The mandatory member or the responsible manager of the Factoring company shall have financial or banking or commercial or insurance expertise where his experience period shall not be less than Ten years subsequent to obtaining the high qualified certificate and the company shall not practice that activity until that requirement is being fulfilled with the notification of the authority.

The Following Conditions shall be met as for practicing the factoring:

1. The activity shall be affected by the company according to the rules and regulations made by its board of directors according to the known criteria and within the laws and regulations undertaken with the notification of the authority.

2. The company shall have a bookkeeping where it can register the details of it operations and the nature of the activity under the contract, its value, the credit limit and the way and proof of paying the due accounts

3. The company shall obtain upon its incorporation the membership of one of the international factoring groups that organize practicing the factoring activity like the "Factoring chain international F.C.I" and the "International Factoring Group I.F.G" as for the factoring companies that practice international factoring.

4. The company shall undertake the suitable measures for practicing factoring in the external markets where the international factoring doesn't exist.