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Business Process Document

Version 1.0

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Factoring is the purchase of accounts receivable for immediate cash. Account

receivables are invoice, LC, PO.

Process: Registration
Registration process involves the process of issuing empty application by the
executive (clerk) as per the factoring to the client. The client fills the application and
returns to the executive (clerk). The clerk does data entry of the application. The
system has to generate application id & client id (new client only). The executive
(clerk) paralley captures the documents submitted by the client. Executive (clerk)
paralley scans & uploads the document. These documents are tagged along with the
application id. The executive (officer)/ approver approve the application and the
application details are forwarded to appraisal department/process.

Process: Appraisal
Incase of appraisal process the executive captures the list of application’s to be
processed for the appraisal process. The executive (clerk) orders for the appraisal
process to pre-listed credit bureau agencies. The executive (clerk) keeps track of the
appraisal order list and waits for the appraisal report. As per the UCC/ SSN the
appraisal process executed by the credit bureau agents and returns the rating
reports to the executive (clerk). The executive (clerk) enters the rating report details
against the client id and tag to particular application id. The rating report verified by
the executive (officer) and assigns the sanction limit else rejects the client based on
the rating. The executive (officer) appends the remark of the sanction. The executive
(clerk) creates the loan account number and tags the sanction details to the loan
account. Once the loan account created the details are notified to the client.

Process: factor
The client produces the AR(Account Receivables) documents to the executive
referring against the loan account number. The clerk collects the AR documents and
does an advance entry against the loan account no and the executive applies the
factor charges & other processing charges to advance entry. Each advance entry
uniquely identified by the advance entry id. In case the invoice for LC/PO then this
invoice/LC tagged against corresponding PO. The advance entry is verified against
the outstanding balance of the loan. Incase the advance claimed by the client more
than outstanding /additional outstanding balance then the advance declined. The
advance entry less than the outstanding then according to the approval of the
executive (officer) the advance is sanctioned to the client against the AR. The
executive generates the advance sanction receipt. The paralley process that happens
is notification. The factor process is regular cyclic process.

Process: Notification
Notification is the process of informing to the parties involved in the cash
transaction. Usually the parties involved are client, customer, brokers, and co-factor.
The notification involves generating of various reminders .messages and sending to
the parties. The notification types are mentioned in the appendix /notification.

Process: Provision

Provision is process of changing the advance entry incase the change occurs in the
PO/invoice/LC. The changes are incorporated by the executive (clerk) and approved

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by the executive (officer). The provision changes are to be tracked by the executive

Process: collection/payments

The client has to pay the credits to the factor (bank) at the mentioned time. As the
payments are done against the credits the executive (clerk) assigns the payments
against the advance entry. The collections are categorized as partial payments and
the complete payments. Incase of the partial payments the advance entry broken
down into the paid & non-paid partial entries. The factor charges are billed for the
partial payments until the client pays off the credits.

Appendix A

LC-Letter of Credit
PO-Purchase Order

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