Global Factoring in Malaysia- A Game Changer for Exporters & Importers.
                     Global Factoring in Malaysia: A Game 
Changer for Exporters & Importers
Malaysian companies want to grow internationally. But they are 
hampered by issues like lengthy payment terms, credit risk from 
foreign buyers, and constraints related to working capital. This is 
the exact point at which global factoring can be a potent financial 
remedy that can get past these common obstacles. By giving 
Malaysian companies instant liquidity, reducing foreign credit 
risks, and greatly reducing the strain on their working capital, this 
one changes the face of global trade.
In this blog post it will be discussed how global factoring is a game-
changer specifically for Malaysian exporters and importers.
What is Global Factoring and How Does it Work? 
Before talking about why this one of the known types of 
factoring is a game changer, it is important to know more 
about this factoring.
What is Global Factoring?
Businesses involved in international trade can turn their 
foreign accounts receivable (unpaid invoices) into instant cash 
with the help of global factoring, a specialized financial 
service. In essence, a financial institution called a factor buys 
these invoices at a discount. It essentially acts as a powerful 
solution and accelerant for several
key aspects of trade receivables management which are:
• Accelerated cash flow
• Credit risk mitigation
• Improved credit assessment
• Reduced administrative burden
• Enhanced financial reporting
The term global factoring is also related to a term, i.e., export factoring, 
and often used interchangeably. This is because the fundamental 
concept behind both is that an exporter sells their international invoices 
to a financial institution in order to obtain quick cash, usually shifting 
the burden of collections and the foreign buyer’s credit risk. 
The “global” aspect simply reinforces that the factoring is 
crossing borders.
How Does it Work?
• Exporter ships goods & invoices: A Malaysian exporter sends 
goods to a foreign buyer (importer) and issues an invoice that 
outlines the agreed payment terms, which usually range 
from 60 to 90 days.
• Exporter sells invoice to export factor: The Malaysian 
exporter then sells this invoice to a factoring company in 
Malaysia, known as the Export Factor.
• Export factor advances funds: The export factor quickly pays 
the Malaysian exporter a significant portion of the invoice’s 
value, typically around 80-90%. This gives the exporter 
immediate access to working capital.
• Credit protection & collection handover: Next, the export 
factor connects with a partner factoring company in the 
importer’s country, referred to as the Import Factor. The import 
factor evaluates the foreign buyer’s creditworthiness and often 
takes on the risk of non-payment (in a non-recourse factoring 
arrangement).
• Import factor collects payment: When the invoice is due, 
the import factor, being located in the same country as 
the buyer, manages the collection process directly from 
the foreign buyer, often using their local language and 
following local customs.
• Final payment to exporter: After the import factor 
successfully collects the full payment from the foreign 
buyer, they send the remaining balance of the invoice 
(after deducting the factor’s fees and any initial discount) 
back to the Malaysian exporter.
Why It’s a Game-Changer for Malaysian Exporters and Importers?
Now it’s time to discuss how it is a game changer for both of these 
entities by learning about the benefits of factoring.
For exporters:
• Immediate liquidity: Transform your foreign receivables into cash 
right away, giving exporters the working capital they need for 
operations, production, and new orders.
• Reduce credit risk: Safeguard yourself against defaults from 
foreign buyers, particularly in new or high-risk markets, boosting 
their financial security.
• Streamline collections: By outsourcing international collections, 
exporters can lighten their administrative load, cut down on 
legal costs, and concentrate on what they do best.
• Gain a competitive edge: Offering longer credit terms to foreign 
buyers makes Malaysian products even more appealing on the 
global stage.
• Explore enhanced funding options: Tap into financing 
opportunities beyond the usual bank loans, often without 
needing extra collateral.
• Minimize FX risk: Getting paid sooner helps exporters avoid the 
pitfalls of currency fluctuations that can come with lengthy 
payment cycles.
For Importers:
• Improved supplier relationships: By allowing suppliers to receive 
their payments more quickly through their own factoring, 
Malaysian importers can negotiate better terms and secure a 
more dependable supply.
• Optimized cash flow: For importers utilizing import factoring or 
various supply chain finance options, this approach can help 
them extend their payment terms to suppliers while ensuring 
that those suppliers are paid on time.
• Access to new suppliers: This can open up trade opportunities 
with suppliers who prefer immediate or secure payments, 
broadening the range of sourcing options available.
These points show how it has become a game changer for 
exporters and importers.
Also Read: 
Why Trade Finance is Essential for Indonesian Businesses.
To reap the benefits of this factoring, Malaysian businesses should 
look for reliable global factoring solutions.
M1 NXT can be that solution for Malaysian businesses. 
It is leading the charge in next-generation working capital 
solutions, providing businesses with a state-of-the-art 
platform designed to meet the ever-evolving needs of the 
global market. 
This innovative, user-friendly, and secure online platform 
offers a completely paperless experience. That is why it is 
able to transform how businesses access international 
factoring products. With M1 NXT, businesses will find 
solutions that optimize cash flow management. It also 
helps them to decrease risks and maintain financial 
stability as they venture into new business opportunities.
Conclusion
By learning about the benefits, both exporters and importers 
know how global factoring is a game changer for them.
M1 NXT offers Malaysian businesses a cutting-edge, secure, 
and paperless online platform for next-generation working 
capital solutions. It provides innovative international factoring 
products to optimize cash flow, mitigate risks, and ensure 
financial stability for global expansion.
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