Types of Factoring

Factoring is an arrangement between the banks and a company in which financial institution buys the book debts of a company and pays the cash to the company against receivables and then collects the amounts from the debtors of the company. Given below are various types of factoring which company can take from a financial institution or bank –

1. Recourse Factoring – Under this type of factoring the bank purchases the receivables on the condition that any loss arising out or bad debts will be borne by the company which has taken factoring.

2. Non- Recourse factoring – Under this type of factoring the bank takes all the risk and bear all the loss in case of debts becoming bad debts.

3. Invoice Discounting – Under this type of factoring the bank provide a advance to the company against the account receivables and in turn charges interest rate from the company for the payment which bank has given to the company.

4. Maturity Factoring – Under this type of factoring bank does not give any advance to the company rather bank collects it from customers and pays to the company either on the date of collection from the customers or on a guaranteed payment date.

1 comment… add one
  • shanthi

    other types are
    disclosed and undisclosed factoring
    reverse factoring
    full factoring
    domestic and export factoring

Leave a Comment

Related pages

examples of substitutes goodsesop full formdisadvantages of privatizationcashless society advantages and disadvantagesdifference between capitalist economy and socialist economybrs statementexamples of accounting conventionswhat is endorseehire purchase disadvantagesconsignee consignorkyc abbreviationadvantages of trading internationallycash inflow examplescash flow statement wikipediaexample of nondurable goodsexamples of normal goodscapital receipts exampleswhat is the difference between durable and nondurable goodsadvantages of a takeovernormal goods inferior goodsadvantages and disadvantages of evadefinition of cost push inflationdematerialisation of shares pptentry for prepaid insurancedisadvantages of inflationwhat is crr and slrdisadvantages of organisation structuredisadvantages of commodity moneymonopoly and oligopoly market structuresdisadvantages of perfect competition marketbenefits of payback perioddifferent kinds of factoringunearned revenue earned journal entryloan advantages and disadvantagesauthorized vs issued sharesmeaning of merits and demeritsfinance ebitwhat is autocratic leaderfinancial derivatives pptproduct bundling strategycheque defmonopolistically competitive marketscashless society advantages and disadvantagesunearned revenue adjusting entryunearned revenue journal entriesano ang mixed economyasset revaluation reserve journal entriesskimming price strategydisadvantages of budgetingdefinition of bill discountingfeatures of capitalist economyadvantages of deflationwhat is the difference between accounting profit and economic profitwhat is the difference between shares and debenturesmerits of advertisementhow to calculate creditors turnover ratioformula for rocecomplementary goods exampleredeemable preference shares definitioncashless economyjoint ventures advantages and disadvantagesexamples of substitutes in economicswhat is the difference between debentures and sharesmarginal diminishing utilityassest meaningwhat are characteristics of a command economydisadvantages of conglomerate integrationquota and tariffeconomic value added advantages and disadvantagesdebit cards advantages and disadvantagesrules of bank reconciliation statementdirect and indirect quotes in foreign exchange marketreasons for failure of mergers and acquisitionscharacteristics of managerial accountingfull form of cpiearned but unbilled revenueexamples of derivative securitiesideal liquidity ratio