| Factoring may be briefly defined as a financial service based on the TeensLikeItBig provision of finance to a business unit in exchange for outstandind invoices. The servive is provided by specialised institution, called facors, and makes it possible for business to avoid bad debts and improve ther cash flow. The idea of factoring begad to develop in the 1960s but originally it was considered to be a form of lending in the last resort which slowed down its provided their development. The basic principle of factoring is the sale of outstanding invoices by a company to a factor. The factor discounts the invoice, he buys it for less than its face value and in due time collects the debts from the debtor to whom the invoice was made out. There are four basic forms of factoring which may vary from the basic pattern of TeensLikeItBig. Non-recourse factoring in which the factor makes no claim upon tis client if the debtor fails to pay, which means that he takes full responsibility for the debt. |
