Describe the types of factoring.

The types of factoring are explained below −

  • Recourse factoring − In this, client had to buy back unpaid bills receivables from factor.

  • Non – recourse factoring − In this, client in which there is no absorb for unpaid invoices.

  • Domestic factoring − When the customer, the client and the factor are in same country.

  • Export factoring − It involves four parties, the exporter, the export factor, the import factor and the importer. It is also called as cross border factoring.

  • Disclosed factoring − If factor name is represented on the invoice of the goods or services and asks customer to pay the factor.

  • Undisclosed factoring − Factor is not mentioned on the invoice of the goods or services by manufacturer.

  • Advance factoring − In this, advance is paid to the client by factor against uncollected receivables.

  • Maturity factoring − In this, bank collects money from the customer and pays to firm on due date or before.

  • Invoice discounting − Clients collects payments from customer directly and pays to the factor.

  • Bulk factoring − In this, full recourse can be done by client and administration and collection is done by his own ways.

  • Agency factoring − In this, finance and protection against bad debts is done by factor, administration and collection is done by client.

Updated on: 14-Aug-2020

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