Factoring Agreement Meaning Forfaiting In King

State:
Multi-State
County:
King
Control #:
US-00037DR
Format:
Word; 
Rich Text
Instant download

Description

A factor is a person who sells goods for a commission. A factor takes possession of goods of another and usually sells them in his/her own name. A factor differs from a broker in that a broker normally doesn't take possession of the goods. A factor may be a financier who lends money in return for an assignment of accounts receivable (A/R) or other security.

Many times factoring is used when a manufacturing company has a large A/R on the books that would represent the entire profits for the company for the year. That particular A/R might not get paid prior to year end from a client that has no money. That means the manufacturing company will have no profit for the year unless they can figure out a way to collect the A/R.

This form is a generic example that may be referred to when preparing such a form for your particular state. It is for illustrative purposes only. Local laws should be consulted to determine any specific requirements for such a form in a particular jurisdiction.

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FAQ

Factoring is commonly referred to as accounts receivable factoring, invoice factoring, and sometimes accounts receivable financing. Accounts receivable financing is a term more accurately used to describe a form of asset based lending against accounts receivable.

In factoring, once a business sells its accounts receivables to a factor, they are selling 100% of the invoice. In forfaiting, when a business gives up the right to trade receivables to international trade finance companies, they are giving up 100% of their claim on it to the forfaiter.

What is international factoring? International factoring is the process of purchasing an invoice from an exporter in one country and collecting it later from his buyer/importer located in another country.

Export factoring is the process where a lender or a factor buys a company's receivables at a discount. It includes services like keeping track of accounts receivable from other countries, collecting and financing export working capital, and providing credit insurance.

Forfeited; forfeiting; forfeits. transitive verb. 1. : to lose or lose the right to especially by some error, offense, or crime.

Factoring and forfeiting differ in eligible receivables terms and risk coverage. Factoring and bills discounting both provide short term financing but differ in recourse, collection responsibilities, additional services, and treatment of individual bills.

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Factoring Agreement Meaning Forfaiting In King