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  • Factoring: Presenting By: Basavaraja K J

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    Basavaraja K J Raaz
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    Factoring involves the selling of a business's accounts receivable to a third party at a discount in order to obtain immediate funding. There are various types of factoring arrangements including recourse, non-recourse, advance, and maturity factoring. Factoring provides more services than bill discounting such as maintaining sales ledgers and providing advisory services. A key difference is that in factoring, the factor purchases trade debts by assignment and is responsible for debt collection, whereas in bill discounting the client remains responsible for collection.

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    Factoring

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    Factoring involves the selling of a business's accounts receivable to a third party at a discount in order to obtain immediate funding. There are various types of factoring arrangements including recourse, non-recourse, advance, and maturity factoring. Factoring provides more services than bill discounting such as maintaining sales ledgers and providing advisory services. A key difference is that in factoring, the factor purchases trade debts by assignment and is responsible for debt collection, whereas in bill discounting the client remains responsible for collection.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
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    36 views9 pages

    Factoring: Presenting By: Basavaraja K J

    Uploaded by

    Basavaraja K J Raaz
    Factoring involves the selling of a business's accounts receivable to a third party at a discount in order to obtain immediate funding. There are various types of factoring arrangements including recourse, non-recourse, advance, and maturity factoring. Factoring provides more services than bill discounting such as maintaining sales ledgers and providing advisory services. A key difference is that in factoring, the factor purchases trade debts by assignment and is responsible for debt collection, whereas in bill discounting the client remains responsible for collection.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 9

    FACTORING

    Presenting by :
    Basavaraja K J
    Meaning

    The selling of a businesses accounts


    receivable to a third party at a discount, for
    the purpose of obtaining immediate
    funding.
    Mechanism
    characteristics

    • Bailment contract
    • Forms of factoring
    • Assignment of debt
    • Less dependence on bank finance
    • Compensation
    Types of factoring
    1. Recourse Factoring
    2. Non-recourse Factoring
    3. Advance Factoring
    4. Maturity Factoring
    5. Full Factoring
    Types of factoring (contd..)

    6. Disclosed Factoring
    7. Domestic Factoring
    8. Domestic Factoring
    9. International Factoring
    Factoring v/s Bill Discounting
    Bills Discounting Factoring
    1.It is a provision of finance against 1.Factoring renders all services like
    bills. maintenance of sales ledger, advisory
    services, etc in addition to the provision
    of finance.

    2.Advances are made against the bills. 2.Trade debts are purchased by
    assignment.

    3.The drawer undertakes the 3.Factoring undertakes to collect the


    responsibility of collecting the bills and bills of the client.
    remitting the proceeds to financing
    agency.

    4.Bills discounted may be rediscounted 4.Debts purchased for factoring cannot


    several times before the maturity. be rediscounted, they can only be
    refinanced.
    Bills Discounting Factoring
    5.Bill discounting is always with 5.Factoring may be with or without
    recourse, i.e. in case of default the client recourse.
    will have to make good the loss.

    6.Bill financing is individual transaction 6.Whereas in factoring, bulk is provided


    oriented. against several unpaid trade generated
    invoices in batches.

    7. The drawee or the acceptor of the 7. Factoring services like 'undisclosed


    bills is in full knowledge of the bank's factoring' are confidential in nature i.e.
    charge on the receivables arising from the debtors are not aware of the
    the sale of goods and services. arrangements.

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