Factoring: Definition and additional resources from BNET
On GameFAQs: The top 10 video game myths

BNET Business Dictionary

Business Definition for: Factoring

  • the practice of transferring title to foreign accounts receivable to a third-party factoring house that assumes responsibility for collections, administrative services, and any other services requested. Major exporters use factoring as a way of reducing exchange rate risk. The fee for this service is a percentage of the value of the receivables, anywhere from 5% to 10% or higher, depending on the currencies involved. Companies often include this percentage in selling prices to recoup the cost.
  • the sale of debts to a third party (the factor) at a discount, in return for prompt cash. A factoring service may be with recourse, in which case the supplier takes the risk of the debt not being paid, or without recourse, when the factor takes the risk.
  • See also Invoice Discounting

Additional Resources

Factoring Your Way to Liquidity
There are various types of factoring available. These factoring can be in any industry viz. account receivable factoring, asset based lending, business loans, construction factoring, credit card receivables factoring, distributors factoring, equipment, hard money loans, invoice factoring, manufacturing, medical factoring, purchase order financing, real estate lending, staffing, systems, technology, trucking,...
Tags: Factoring, Liquidity, Operational Accounting, Finance
White papers
Factoring Can Be an Ideal Solution for Start-Up and/or Growing Businesses and Me
Factoring is one of the oldest methods of business financing in existence. The history of factoring dates back to the days of moneylenders in the middle ages. Factoring has been the working capital facility of choice in Europe for centuries. It has taken on a new life in recent years...
Tags: Factoring, Financing, Operational Accounting, Finance
White papers
Factoring in Historical Perspective
Article explains the historical perspective of factoring. The roots of factoring go down deep into the business history of America. Not only has factoring grown with the country, it has also made an important contribution to the emergence of the United States from a series of tiny, isolated settlements hugging...
Tags: Factoring, Article, Operational Accounting, Finance
White papers 2003-01-01
Useful Commute: No Man's Land
Useful Commute: No Man's LandWhat about Factoring?What about Factoring? Factoring is a great way to mitigate "No Man's Land." Selling receivables factoring is a fantastic way to finance rapid growth in any size company. The principal’s ability to repay, as mentioned by Tatum, is not...
Tags: credit decision, factoring
Discussion threads 2007-10-31
How to Get Working Capital for Your Company
Factoring, or invoice factoring as it is most commonly known, is a type of business financing that is ideal for owners who cannot wait up to 60 days to get their invoices paid. It provides a person with the necessary working capital to pay rent, suppliers and meet payroll. And,...
Tags: Finance, Operational Accounting, Invoice Factoring, Working Capital, Factoring
White papers 2006-06-05
Global Growth in Factoring?and its Potential in Eastern Europe Financing Small and Medium-Size Enterprises With Factoring
This paper explores the advantages of factoring over other types of lending for firms in developing economies, and discusses the informational, legal, tax and regulatory barriers to its growth. Factoring is a form of asset-based finance where the credit extended is based on the value of the borrower's accounts receivable....
Tags: Factoring, Operational Accounting, Finance
White papers 2004-05-01
The Evolution of Factoring
From its humble beginnings as the mainstay of rag trade and lender of last resort, factoring has reinvented itself to remain an important financing alternative for manufacturers and service providers alike. In this article, Howard Brod Brownstein speaks with several industry professionals and traces the evolution of factoring. The old-fashioned...
Tags: Factoring, Operational Accounting, Finance
White papers 2003-04-01
The Facts on Factoring - Quick Fix or Viable Loan Alternative?
This document reports some of the major advantages of factoring. One big advantage of factoring is the short turnaround time. With no lengthy loan approval process, a business can often have money within a few working days. As long as a business is credit worthy, and receivable invoices are sound,...
Tags: Factoring, Operational Accounting, Finance
White papers 2001-01-16
Financing Small and Medium-Size Enterprises With Factoring: Global Growth in Factoring - and Its Potential in Eastern Europe
In recent years factoring has experienced phenomenal growth and has become an important source of financing - especially short term working capital - for Small and Medium-size Enterprises SMEs and corporations, reaching a worldwide volume of 760 billion euro in 2003. Although the importance of factoring varies considerably around the...
Tags: Financing, Factoring, Operational Accounting, Finance
White papers 2004-05-01
Factoring: An Effective Way to Downsize and Outsource in the '90s
Factoring company offer’s accounts receivable financing, invoice factoring, invoice discounting, working capital financing. The services that the factor performs for the client -credit approval, accounts receivable, bookkeeping, collection - are essential to the client's operation, but they are not the basic areas from which the client creates profit. Factoring provides...
Tags: Factoring, Outsource, Accounts Receivable, Working Capital, Operational Accounting, Finance
White papers 2003-01-01
Operating in the Green: Medical Factoring
Consider the following deal - Some one approaches you to and asks to use of several thousand dollars of your money for the next three months, and agrees to let you have it back, without interest, when those three months are up. It might not be very good deal for...
Tags: Factoring, Article, Money, Operational Accounting, Finance
White papers 2003-01-01
GE Commercial Finance Signs Its Largest Factoring Deal
LONDON -- GE Commercial Finance has extended a five-year, non-recourse trade receivables factoring facility with a credit line of EUR 800m to KME Group S.p.A. GE will purchase and manage KME's receivables across Europe. The deal is GE's largest pan-European factoring transaction.
Tags: factoring, finance, General Electric Co.
Research articles 2006-10-23
Factoring: Helping Small Service Companies Grow
Factoring has taken on a new life in recent years as a financing method of choice for many service industries, such as trucking and temporary staffing. Service companies in an early stage mode often find themselves in the frustrating position of turning away sales opportunities due to a lack of...
Tags: Investment, Financing, Factoring, Textron Financial, Operational Accounting, Financial Accounting, Finance
White papers 2003-04-01
Invoice Factoring Companies: A Valuable Funding Resource
Invoice factoring companies can provide immediate, short-term funds for companies that are unable to obtain a traditional bank loan. Financing from traditional banks generally requires commercial borrowers to have two years in business and showing a profit. Banks tend to favor loans secured by tangible assets like machinery, inventory, equipment...
Tags: Finance, Operational Accounting, Factoring, Bank
White papers
The Role of "Reverse Factoring" in Supplier Financing of Small and Medium Sized Enterprises
The global pattern of factoring suggests that it may have an advantage compared to other types of lending, such as loans collateralized by fixed assets, under certain conditions. However, ordinary factoring has in general not been profitable in emerging markets. This paper focuses on an alternative usually used in emerging...
Tags: World Bank Group, Factoring, Emerging Market, Supplier, Operational Accounting, Free Trade, Financial Services, Finance, Receivables, Small And Medium Enterprise
White papers 2004-09-28
What Is Accounts Receivable Factoring?
Factoring is the selling of invoices or accounts receivables by the business holding them at a discount in order to obtain cash payment on the invoices before their actual due date. Factoring is designed for businesses that want to improve their cash flow by not waiting 30, 45, 60 days...
Tags: Factoring, Accounts Receivable, Operational Accounting, Finance
White papers 2004-03-23
Wells Fargo, Scotiabank Sign Factoring Agreement
SAN FRANCISCO and TORONTO, May 8 /PRNewswire-FirstCall/ -- Wells Fargo & Company and Scotiabank said today that Wells Fargo will provide Scotiabank with factoring services through its Wells Fargo Century subsidiary and treasury services through its Global Correspondent Banking division. Factoring provides exporters and distributors with accounts receivable...
Tags: factoring, Wells Fargo & Co.
Research articles 2008-05-08
Factoring: Converting Accounts Receivables Into Capital
It has been observed that keeping the cash flowing is a challenge for all businesses. As every business owner knows, sales alone do not measure the profitability of a company. The solutions may be Accounts Receivable Funding provided through Diversified Funding Services, Inc. Accounts Receivable Factoring is quickly becoming a...
Tags: Factoring, Accounts Receivable, Accounts Receivable Factoring, Operational Accounting, Finance
White papers 2003-10-01
Reducing the Cash Gap by Factoring
This paper discusses about situations where growing firms often find themselves strapped for money. A gap in cash is created when bills are paid weeks before cash comes in from customers. The cash gap can be shortened by concentrating efforts on fast moving inventory, implementing a just-in-time inventory model, negotiating...
Tags: Factoring, JIT, Florida Gulf Coast University, Operational Accounting, Quality, Finance, Business Operations
White papers 2000-11-02
Factoring...A Sensible Solution In Today's Tight Credit Environment
Cash flow is a business's biggest need, and when it fails to flow, there is a simple and time proven method to liquidate receivables into ready cash. Factoring is a cash flow tool that can be used by a variety of businesses because of the ancillary services it provides and...
Tags: Finance, Operational Accounting, Factoring, Environment
White papers 2002-01-01
advertisement
advertisement