concept of factoring operations and their advantages
Factoring operations are presented range of services related to the provision of deferred payment.It's kind of intermediary activity in which the role of mediator belongs to the factoring company or bank.It is the company behind the pre-agreed fee is entitled requirements and crediting to the Seller the amount of money owed to them by customers.
scheme work under factoring operations as follows.The seller ships the goods to the buyer and sends documents to accompany the delivery of factoring companies (invoice, bill of lading).She pays 90% of the value of goods delivered.And after receiving the debt from the buyer, transfers and balance of minus own commission.
popularity of factoring services is due to the fact that content providers receive money for g
oods shipped, and it did not occur shortage of working capital.Moreover, the seller has the ability to reduce the risks that entails postponement.In particular, such as currency fluctuations, fraud, non-payment of goods, inflation and so on. Factoring companies also carry out professional work with debt, and may take appropriate measures to return the debt.They check the goodwill of customers and monitor the status of the debt.
classification of factoring transactions
Factoring operations can be classified on various grounds.From the point of view of the region of the transaction are divided into internal, when all the participants in the transaction are located in the same country and international, when one of the participants - a resident of another country.
There are also indoor and outdoor factoring operations.In the latter case, the buyer does not know about the participation of the factoring company in the transaction.Open factoring operations are not of a confidential nature.
There are operations with or without recourse of the law.In the first case the factoring company has the right to demand compensation from the lender if the buyer refuse to pay.Treaty without recourse almost never occur.
Types of factoring transactions
Based on schemes of factoring can distinguish these types of operations as checking suppliers, financing transactions, debt management and covering the risk of default.
Before any factoring operations to pre-screen suppliers and buyers.Thus, the factoring company insures itself against risks of fraud.Based on the analysis of potential debtors is determined by the future financing limit, as it is done in order to identify unscrupulous buyers.
key factoring operation - this financing transaction, so the supplier has the ability to replenish working capital, and the buyer - the postponement of payments.It is for this and are turning to factoring companies.
factoring company manages receivables, it helps to improve the payment discipline of clients and prevent delinquency.The transfer of the operation is outsourced to a vendor economic advantages, in comparison with the organization of a separate division.
Service to cover the risk of default means that the provider gets paid regardless of the income of the debtor, and the risks of non-payment takes the factoring company.This operation is not necessary.