Factoring: Difference between revisions
imported>Doug Williamson (Add link.) |
imported>Doug Williamson (Add link.) |
||
| Line 22: | Line 22: | ||
* [[Factors]] | * [[Factors]] | ||
* [[Confidential factoring]] | * [[Confidential factoring]] | ||
* [[Debt factoring]] | |||
* [[Domestic factoring]] | * [[Domestic factoring]] | ||
* [[Export factoring]] | * [[Export factoring]] | ||
Revision as of 21:48, 18 June 2016
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.
