Perfection for the Company Work with the Factoring Company

Factoring operations as a form of trade and commission operations arose in the 16th-17th centuries. Initially, these were the operations of specialized trade intermediaries, and then of commercial banks. In the process of economic activity, enterprises may have a need for immediate conversion of receivables into real money through factoring.

The Effective Solutions Now:

Factoring is a trade and commission transaction related to the assignment by the supplier of the debt claims (payment documents for goods delivered, works performed, services rendered) to another person (factor) payable by the payer (buyer) and the transfer to the factor of the right to receive payment for them. Using the factoring company is the best option in such cases.

  • In the role of factors can act banks, non-bank credit and financial and other organizations? To engage in factoring, the factor must have the appropriate permission of the National Bank, which grants the right to finance under the assignment of a monetary claim (factoring) in the currency of factoring.
  • Under a financing agreement under a concession of a monetary claim (factoring), one party (factor) undertakes to the other party (creditor) to enter into a monetary obligation between the creditor and the debtor on the creditor’s side by paying the creditor the amount of the debtor’s monetary obligation at a discount.
  • The main principle of factoring is the reimbursement to the supplier of a part of the amount of payment on debt claims to payers. The transfer of the rest of the payment for the goods delivered is effected by the factor after the receipt of funds from the payer. However, there may be an immediate reimbursement to the supplier of the full amount of the debt (minus the commission and interest for the loan).

Using the Budget Now:

The supplier first receives a certain amount (less than the entire cost of the goods) directly from the factoring company that serves it at the time of shipment of the goods to the buyer (before payment by the buyer), and the rest of the amount is paid within a certain period specified in the contract, after the factoring company has paid the buyer or regardless of the receipt of funds from the buyer. Thus, the supplier immediately receives a significant amount for the delivered products, the work performed, the services rendered, and the rest – in strictly stipulated terms. Incomplete payment of invoices at the time of acquisition serves as a guarantee for the factoring firm against possible losses in connection with any circumstances (for example, shortage of goods by the supplier, refusal of the debtor from payment, etc.).

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