Receivable Factoring

The mechanics of Account Receivable Factoring

There are three main participants involved in a factoring transaction. There is the factor, the seller and the payer. The factor is the party purchasing the receivables, the seller is the business that is selling the receivables and the payer is the seller’s customer or, the business that owes the money.

Once the invoice has been verified and payer notified to write the check out to the factor and send payment to the factor, the factor then will advance to seller the pre-determined advance rate against the face value of the receivable. (Up to 90%)

When the payment of the invoice is received by the factor, the factor deducts their fees and passes the remaining funds (known as the hold-back or reserve) back to the seller. Note: the reserve is normally paid out at the end of the month regardless of when the payment was received.

Our staff are acknowledged experts in factoring, the long-established approach to obtaining working capital through the sale of a company's accounts receivable invoices. We offer full-notification, non-recourse factoring. This means that account debtors – the customers of our clients – are notified to pay our factoring companies directly, who assume the credit risk of non-payment. For our clients, this approach reduces risk and allows for fast funding.

Benefits of Factoring