Gross profit margin and Invoice factoring: Difference between pages

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''Financial ratio analysis.''
''Trade finance.''


Gross profit margin is one of a number of profitability ratios.
The sale or transfer by a supplier of legal title to accounts receivable (invoices).


It is calculated as gross profit divided by revenue, and usually expressed as a percentage.
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.


Also known as the 'gross profit ratio', or 'gross profit percentage'.


Invoice factoring is often a convenient - but relatively expensive - form of finance for weaker corporate credits.


==See also==
The supplier sells its invoices, at a discount, to the factor. The factor then becomes responsible for collecting the debt.
*[[Gross profit]]
*[[Net profit margin]]
*[[Operating profit margin]]
*[[Profit margin]]
*[[Profitability]]
*[[Profitability ratio]]
*[[Ratio analysis]]
*[[Revenue]]


[[Category:Accounting,_tax_and_regulation]]
An invoice factoring agreement between the factor and a client sets out the terms on which a factoring arrangement is made.
 
 
As noted above, invoice 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 Factoring.
 
 
== See also ==
 
* [[Factors]]
* [[Confidential factoring]]
* [[Debt factoring]]
* [[Domestic factoring]]
* [[Export factoring]]
* [[FCI]]
* [[Forfaiting]]
* [[Import factoring]]
* [[Internal factoring]]
* [[International factoring]]
* [[Invoice]]
* [[Invoice discounting]]
* [[Recourse]]
* [[Reverse factoring]]
* [[Securitisation]]
* [[Trade finance]]
* [[Whole turnover]]
 
[[Category:Corporate_finance]]

Latest revision as of 10:17, 11 March 2021

Trade finance.

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.


Invoice 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.

An invoice factoring agreement between the factor and a client sets out the terms on which a factoring arrangement is made.


As noted above, invoice 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 Factoring.


See also