Factoring is a specific form of short-term financing based on the sale of short-term, usually unsecured, assets of the company to a specialized financial organization called the Factor.
1. The Client (your company) delivers the product / service to the Customer;
2. The Client delivers to the factor the invoice / copy of AOI / promissory note (depending on the subject of the repurchase) along with the Request for factoring;
3. The factor inspects the credit rating of the Customer;
4. The factor pays an advance amounting to 80% - 98% of the nominal value of the repurchased receivable to the Clients transactional account;
5. When the receivable becomes due the Customer remits payment to the transactional account of the Factor;
6. After the receivable has been collected the Factor pays out the remainder of the principal.