Factoring: Difference between revisions
imported>Doug Williamson (Add alternative name.) |
imported>Doug Williamson (Add links.) |
||
| Line 34: | Line 34: | ||
* [[International factoring]] | * [[International factoring]] | ||
* [[Invoice discounting]] | * [[Invoice discounting]] | ||
* [[Limited recourse]] | |||
* [[Non-recourse]] | |||
* [[Recourse]] | * [[Recourse]] | ||
* [[Reverse factoring]] | * [[Reverse factoring]] | ||
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.
