Factoring: Difference between revisions

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The sale or transfer of legal title to accounts receivable to a third party (factor), either with or without recourse. Often a convenient but relatively expensive form of finance for weaker corporate credits.
The sale or transfer by a supplier of legal title to accounts receivable (invoices).


A financing technique whereby a company sells its invoices, at a discount, to a factor. The factor then becomes responsible for collecting the debt.  
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 arrangements can be with or without recourse.


Recourse factoring allows the factor to recover any losses caused by bad debts from the borrower.
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 ==


* [[Confidential factoring]]
* [[Debt factoring]]
* [[Domestic factoring]]
* [[Export factoring]]
* [[Factors]]
* [[Factors]]
* [[Export factoring]]
* [[FCI]]
* [[Forfaiting]]
* [[Import factoring]]
* [[Internal factoring]]
* [[Internal factoring]]
* [[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 22:49, 28 February 2024

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