Types of A/R Factoring
Here are the main types of accounts receivable factoring you may run across:
Agency Factoring
Customers are notified on the invoice that a factor company is collecting payments on behalf of the merchant.
Confidential Factoring
The merchant is responsible for collecting invoice payments from it's customers and then making payments to the factor.
Recourse Factoring
The factor company is responsible for the administration of the sales ledger as well collecting invoice payments from the merchant's customers. If the customer doesn't pay an invoice after a set amount of time, the factoring company will require payment against that invoice by the merchant.
Non-Recourse Factoring
Similar to recourse factoring, but the factoring company also provides protection against non-paying or bad-debt customers. This is based on threshholds determined by the factoring company on a per-customer basis.
Maturity Factoring
The factoring company guarantees full payment of an invoice to the merchant after a specific number of days from the invoice date, irrespective of whether the customer has paid or not. The main benefit to the merchant is consistent cash flow on a regular basis.
International Factoring
The factoring company partners with other factory companies in the countries of the merchant's customers, who are responsible for collecting invoice payments in each country and then remitting payment back to the source factoring company.
More info on accounts receivable factoring
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