Back تخصيم Arabic Faktorinq Azerbaijani Фактарынг Byelorussian Факторынг BE-X-OLD Факторинг Bulgarian Facturatge Catalan Faktoring Czech Factoring German Πρακτορεία επιχειρηματικών απαιτήσεων Greek Factoraje Spanish
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Factoring is a financial transaction and a type of debtor finance in which a business sells its accounts receivable (i.e., invoices) to a third party (called a factor) at a discount.[1][2][3] A business will sometimes factor its receivable assets to meet its present and immediate cash needs.[4][5] Forfaiting is a factoring arrangement used in international trade finance by exporters who wish to sell their receivables to a forfaiter.[6] Factoring is commonly referred to as accounts receivable factoring, invoice factoring, and sometimes accounts receivable financing. Accounts receivable financing is a term more accurately used to describe a form of asset based lending against accounts receivable. The Commercial Finance Association is the leading trade association of the asset-based lending and factoring industries.[7]
In the United States, Factoring is not the same as invoice discounting (which is called an assignment of accounts receivable in American accounting – as propagated by FASB within GAAP).[8][1] Factoring is the sale of receivables, whereas invoice discounting ("assignment of accounts receivable" in American accounting) is a borrowing that involves the use of the accounts receivable assets as collateral for the loan.[1] However, in some other markets, such as the UK, invoice discounting is considered to be a form of factoring, involving the "assignment of receivables", that is included in official factoring statistics.[9] It is therefore also not considered to be borrowing in the UK. In the UK the arrangement is usually confidential in that the debtor is not notified of the assignment of the receivable and the seller of the receivable collects the debt on behalf of the factor. In the UK, the main difference between factoring and invoice discounting is confidentiality.[10] Scottish law differs from that of the rest of the UK, in that notification to the account debtor is required for the assignment to take place. The Scottish Law Commission reviewed this position and made proposals to the Scottish Ministers in 2018.[11]
- ^ a b c O. Ray Whittington, CPA, PhD, "Financial Accounting and Reporting", Wiley CPAexcel EXAM REVIEW STUDY GUIDE, John Wiley & Sons Inc., 2014
- ^ Cite error: The named reference
CPA_Financewas invoked but never defined (see the help page). - ^ Staff, Investopedia (2003-11-19). "Factor". Investopedia. Retrieved 2018-05-18.
- ^ Cite error: The named reference
Financewas invoked but never defined (see the help page). - ^ The Wall Street Journal, "How to Use Factoring for Cash Flow"[1]; small-business/funding.
- ^ Please refer to the Wiki article forfaiting for further discussion on cites.
- ^ "About Us – Commercial Finance Association". community.cfa.com. Archived from the original on 2016-06-11. Retrieved 2016-06-17.
- ^ J. Downes, J.E. Goodman, "Dictionary of Finance & Investment Terms", Baron's Financial Guides, 2003; and
J.G. Siegel, N. Dauber & J.K. Shim, "The Vest Pocket CPA", Wiley, 2005. - ^ BCR Publishing, "The World Factoring Yearbook" Archived 2013-08-11 at the Wayback Machine, UK Section.
- ^ "ABFA: FAQs". ABFA.org.uk. Archived from the original on 14 March 2017. Retrieved 9 April 2017.
- ^ "Scottish Law Commission :: Moveable transactions". ScotLawCom.gov.uk. Retrieved 18 May 2022.