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Factoring:
Factoring is the selling of a
company’s account receivables to a financial
institution normally at a discounted rate.
Factoring involves a seller/supplier assigning to
a factor, receivables arising from contracts of
sale of goods & services with its customers in the
normal course of business. It is usually performed
to increase cash flow, instead of waiting for the
normal terms associated with the selling to
customers. There are three parties involved in a
factoring transaction: the seller, the buyer and
the factor
Factoring is a complete financial package that
combines credit protection, accounts receivables
bookkeeping and collection services. It is an
agreement between the factor and a seller under
which the factor purchases the seller’s accounts
receivables, with or without recourse, but
normally without recourse.
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