Factoring: Difference between revisions
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The sale or transfer of legal title to accounts receivable | The sale or transfer by a supplier of legal title to accounts receivable (invoices). | ||
The supplier sells or transfers title to the receivables to a third party known as a factor. | |||
The arrangement can be either with or without recourse. | |||
Factoring is often a convenient - but relatively expensive - form of finance for weaker corporate credits. | |||
The supplier sells its invoices, at a discount, to the factor. The factor then becomes responsible for collecting the debt. | |||
A factoring agreement between the factor and a client sets out the terms on which a factoring arrangement is made. | |||
As noted above, factoring arrangements can be with or without recourse. | |||
Recourse factoring allows the factor to recover from the supplier/borrower any losses caused by bad debts. | |||
Also known as Invoice factoring. | |||
== See also == | == See also == | ||
* [[Factors]] | * [[Factors]] | ||
* [[Confidential factoring]] | |||
* [[Debt factoring]] | |||
* [[Domestic factoring]] | |||
* [[Export factoring]] | |||
* [[FCI]] | |||
* [[Forfaiting]] | |||
* [[Import factoring]] | |||
* [[Internal factoring]] | * [[Internal factoring]] | ||
* [[International factoring]] | |||
* [[Invoice discounting]] | * [[Invoice discounting]] | ||
* [[Limited recourse]] | |||
* [[Non-recourse]] | |||
* [[Recourse]] | * [[Recourse]] | ||
* [[Reverse factoring]] | |||
* [[Securitisation]] | * [[Securitisation]] | ||
* [[Whole turnover]] | |||
[[Category:Corporate_finance]] | |||
Latest revision as of 13:24, 26 February 2021
The sale or transfer by a supplier of legal title to accounts receivable (invoices).
The supplier sells or transfers title to the receivables to a third party known as a factor.
The arrangement can be either with or without recourse.
Factoring is often a convenient - but relatively expensive - form of finance for weaker corporate credits.
The supplier sells its invoices, at a discount, to the factor. The factor then becomes responsible for collecting the debt.
A factoring agreement between the factor and a client sets out the terms on which a factoring arrangement is made.
As noted above, factoring arrangements can be with or without recourse.
Recourse factoring allows the factor to recover from the supplier/borrower any losses caused by bad debts.
Also known as Invoice factoring.
