The main difference between conventional banking systems and Islamic banking systems is that in Islamic systems there are no interest rates, and this is prohibited in Shariah. Shariah says that taking money for money plus an interest charge is non-permissible. Also, trading in debts is non-permissible. To make it clearer, in Islamic finance, you cannot trade in money but trade using the money. As by this, money is your tool of trading.
In Islamic factoring you must adjust the workflow to fit the Shariah principles by getting the factoring company into the process before any debts occur. And this is the main challenge because the needs of the clients of the factoring companies are different from one to another so each situation may need a specific financial formula to satisfy those needs without regulating the Shariah principles, at the same time the factoring company wants to make this process most simply.
efcom can help in increasing the volume of Islamic Factoring in the Islamic finance market by offering you a software which can perform a full factoring service with a workflow that doesn’t violate Shariah principles (Shariah compliance product).
