Factoring General Information
Factoring is the transfer of term receivables that arise / will arise from the sales of goods and services to a factoring institution by assignment and the management of these receivables by the factoring institution. Factoring is a three-sided transaction; Selling goods and services (customer), borrowing (debtor) and factoring organization by purchasing this goods and service on a term basis. In foreign factoring transactions, correspondent factor is also added. Assigning the receivables of the companies arising from their real commercial relations based on a document that replaces the invoice or invoice forms the basis of the factoring transaction. In factoring transactions, the factoring company provides its customers with financing, warranty and collection services
It's the advance payment made to the customer by the factoring company before the maturity date of the assigned receivables.
Collection and Management of Receivables
Regarding the management of these receivables; It undertakes the collection, keeps the records of the receivables, performs actions such as notice and warning for the collection of receivables. In addition to this, it is possible to undertake market research and to inform the customer of various information related to the market as a service subject by the factoring company.
Guarantee of Receivable Against the Risk of Unpaid
In case of non-payment due to reasons such as default, insolvency of the debtor, the factoring company undertakes the risk of non-payment of the receivables. In this context, the customer who assigns his receivables to the factor is protected against the fact that the buyers are unable to pay the debt.