Here is how defining concept of the factoring different sources:
Factoring of operation is an operation on purchase and concession of the money requirements, transfer of the right on collecting of duties.
Factoring - purchase, carried out on a contractual basis, of the requirements on commodity deliveries by the firm - factor.
Factoring operation, as against a pledge, are sale of the accounts to the factor as which acts, as a rule, commercial bank, financial company specialized factoring the company.
Factoring is a crediting under the outstanding account with transfer of the right under the accounts.
In a not financial context the word factoring by centuries was used in Scotland for definition of a trade of the manager of property, and in other part Incorporated Kingdom this word is used in some industries as a substitute of words the wholesale dealer.
Thus, factoring is a multi-purpose operation, in which is possible to allocate types and kinds.
Factoring service also will enable to speed money resources in accounts and by that to receive not only economy of money resources, but also to raise production efficiency.
The operation is considered as factoring if it satisfies as a minimum 2 from 4 attributes:
1. Presence of crediting in the form of the advance payment of the debt requirements;
2. Conducting the account of the supplier, first of all of account of realization;
3. Collection of its debts;
4. Insurance of the supplier upon credit risk.
But in most cases to factoring as before, carry the account of the accounts - invoices - operation, which satisfies only to one, first, from the given attributes.
In the different countries the practical interpretation of attributes factoring has distinctions. So, for example, in USA by such attributes are:
- Administrative service of the supplier - management of debts under the given commercial credit (conducting the account of sales);
- Insurance upon credit risk (there is no right of recourse);
- Crediting in the form of the advance payment.
After end of operation the bank returns the sum to the client. It is one of ways of realization of operation factoring.
Three parties take participation in factoring operations:
1. Factoring company (department of bank) - specialized organization, which buys the accounts from the clients.
2. The client (supplier of the goods, creditor) - enterprise, which has concluded the contract with factoring by the company.
3. Enterprise - firm - buyer of the goods.
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