means the financing body which will offer factoring to its client.A
means seller or supplier of goods/services on credit.A
means the buyer who buys goods/services on credit.
Accounts Receivable/Book Debt
means the trade debt arising from sale of goods/services by seller to buyer on credit.
Open Account Trade
means an arrangement in which the goods/services aresold /supplied by seller to buyer on credit without raising any bill of exchange or letter of credit.
means advance payment made by the factor to the client (seller) upto certain percentage of the invoice value (generally it varies from 75 to 85% of invoice value).
means margin maintained by the factor (invoice value minusprepayment). The margin is kept to a) recover discounting & factoring chargesand b) maintain a cushion for any short payment by buyer on commercial groundand/or recovery of any overdues in respect of other invoices. The retentionamount generally varies from 15 to 25%. After deducting its dues from the marginthe balance amount is refunded to the client (seller).
means a document or form used by a buyer to issue order for goods/services.
means a legal debt instrument which indicates the amount due from abuyer to pay for delivered goods/services.
if the payment received from the debtor against an invoice isless than the value of the invoice for any of the following reasons:i) Discount agreed/levied by buyer for non compliance of trade terms by seller ii) Rejection of goods/servicesii) Adjustment on account of two way trades
means a type of factoring where the factor assumes completeresponsibility for collection of debt. If the debt is not collected due to the financialinability of the buyer (and not arising out of trade dispute), the factor assumes theloss or recovers from credit insurer. Non recourse factoring can be offered whencredit insurance market is developed.