On the factoring basis lays outstanding debt requirement of factoring company that is a general element for all kinds of factoring. Factoring of operation of banks is classified as:
- Internal, if the supplier and its client, i.e. the parties under the contract of sale and purchase, and also factoring company are in the same country, or international;
- Notification factoring is a form factoring of service, at which the debtor is notified.
- Non-notification or confidential factoring. In this case payer conducts accounts with the supplier, which after reception of payment should list its appropriate part of the company factoring for repayment of the credit
The given conditions are connected to risks, which arise at failure of the payer of the obligations performance, i.e. credit risks. At the conclusion of the agreement with the right of recourse the supplier continues to bear the certain credit risk under the debt requirements sold by them a factoring company.
The given condition is provided, if the suppliers are sure, that at them the doubtful liabilities can not appear, or that they carefully enough estimate credit status of the clients, having developed own, the effective system of protection from credit suffices is brave, or by virtue of specificity of the clients. Both in that and in the other case the supplier does not consider necessity to pay services for insurance of credit risk. However guaranteed for the supplier and the duly inflow of money resources can be provided only at the conclusion of the agreement without the right of recourse. It is necessary, truth to note, that, if the debt requirement is recognized void, the factoring company has the right of recourse to the supplier in any case.
In the first case, the client of the factoring company ship production, shows the accounts to the buyer via the company, which task to receive for the benefit of the client payment in terms according to the economic contract (usually from 30 about 120 days).
In case of the advance payment the factoring company buys the accounts - invoice from the client on conditions of an immediate reimbursement 80-90 % of shipment costs. Reserve 10 - 20 % of shipment costs is not paid to the client, and is reserved on the separate account on a case of the claims in its address from the buyer on quality of production, and its price. The reception of such service most fully satisfy requirements of the functioning enterprises, as allows them to transform sale with a delay of payment into sale with an immediate reimbursement by means of factoring and thus to speed up movement of the capital. The basic advantage of the advance payment is that its size represents fixed percent from the sum of the debt requirements. Thus, the supplier automatically receives more means at increase of the sales volume.
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