billdiscounting.ae

factoring is defined as ‘a continuing legal relationship between a financial institution (the factor) and a business concern (the client), selling goods or providing services to trade customers (the customers) on open account basis whereby the factor purchases the client’s book debts (accounts receivables) either with or without recourse to the client and in relation thereto controls the credit extended to customers and administers the sales ledgers’. if we explain this in easy language, it is: •it is the outright purchase of credit approved accounts receivables with the factor assuming bad debt losses. •factoring provides sales accounting service, use of finance and protection against bad debts. •factoring is a process of invoice discounting by which a capital market agency purchases all trade debts and offers resources against them. how did it evolve: •the term factor has its origin from the latin word, ‘facere’meaning to get things done. the dictionary defines a factor as an agen