Invoice factoring: Difference between revisions
imported>Doug Williamson (Create page: Source The Group Treasurer: an ACT Guide to the first 100 days, Page 34.) |
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''Trade finance.'' | |||
The sale or transfer by a supplier of legal title to accounts receivable (invoices). | The sale or transfer by a supplier of legal title to accounts receivable (invoices). | ||
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* [[Reverse factoring]] | * [[Reverse factoring]] | ||
* [[Securitisation]] | * [[Securitisation]] | ||
* [[Trade finance]] | |||
* [[Whole turnover]] | * [[Whole turnover]] | ||
[[Category:Corporate_finance]] | [[Category:Corporate_finance]] | ||
Revision as of 16:09, 14 October 2020
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.
