Factoring: Difference between revisions

From ACT Wiki
Jump to navigationJump to search
imported>Doug Williamson
(Add link.)
imported>Doug Williamson
(Add links.)
 
(4 intermediate revisions by the same user not shown)
Line 16: Line 16:


Recourse factoring allows the factor to recover from the supplier/borrower any losses caused by bad debts.
Recourse factoring allows the factor to recover from the supplier/borrower any losses caused by bad debts.
Also known as Invoice factoring.




Line 31: Line 34:
* [[International 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.


See also