Business Terms and Jargon Explained

What is Factoring

A company which is owed money by trade debtors faces risks. The risk of slow payment or default on those debts can put a strain on its cash flow. One of the ways it can mitigate this problem or perceived problem is by factoring the invoices.

Special companies exist called factors which will pay the company a high proportion of the amount it is owed, in return for the right to collect the debts from the debtors. The company gets a high percentage of the amount it is owed direct from the factor. The factors chases the debt and keep the difference.

The money that is given to the company by the factor is a loan and mortgage papers will be submitted to companiesí house. The percentage of the invoice that the company receives will depend on the risk of default and whether the debt is bought.

<- Go Back
Business Terms Home page

Search Jargon and Terms Database

A   B   C   D   E   F   G   H   I   J   K   L   M   N   O   P   Q   R   S   T   U   V   W   X   Y   Z


Search Term   

Proxy Board of Directors Refer to drawer
Nominated court Power of Attorney House Organ
Surplus Financial equity Third Country
Fleur de Coin Banking book Trade reference
Zaire Vide Retail Prices Index - RPI - RPIX
Statutory Company Legal tender Pupillage
Ex Stock Sniffing Letter of request
HTML Trial bundles Tax Month
Institutional Sector File Permissions LCP
Alibi Transposition - EU Mutual Linking Agreement
Beneficial loan Payee Denar
Loan Agreement Off Balance Sheet Reporting Period
Cross examination Easter egg Capsizing

Term created / updated 2005-07-16 23:12:15

Knowledge is the key to success. That is why we have gone to great lengths to get you these business terms and jargon, and explain them in Plain English. Its very easy to comprehend. Learn to understanding and know your business jargon. This will keep you informed among your peers. Bookmark Your business dictionary.

Copyright © 2004-2022 Scopulus Limited. All rights reserved.