Factoring Fundamentals

Factoring is the fastest growing form of trade finance in the World at the moment. Factoring is the purchase by the factor of debts evidence by invoices where the factor pays out an agreed advance taking an assignment of the debts. Factoring is flexible and provides fast access to cash for the seller with a growing sales ledger.

The role of the Factoring in Trade Finance is increasing dramatically. It is therefore essential to have a good understanding of the foundations of factoring operations.

In this unit you will learn:

- The basic procedure in factoring operations;
- The operation of a Factoring company;
- The key contents of a Factoring agreement
- Risk management for Factoring operations.

Completing this course will confer 5 CPD Credits towards internationally recognised Continuous Professional Development Requirements within organisations operating this kind of staff development methodology.

Course Outline

1. INTRODUCTION TO FACTORING

1.1 The Factoring Division

1.2 Factoring or Invoice Purchase Procedures

1.3 Initial Procedures

1.4 Mechanics of Processing a Client Order

2. THE FACTORING AGREEMENT

2.1 The Factor's Discretion

2.2 Fees

2.3 Termination

2.4 Personal Guarantee

3. The Contract

3.1 The Contract - Warranties

3.2 Purchase All Acceptable Accounts by Factor

3.3 Prior Approval of Sales

3.4 Notice of Assigned Invoices to appear on all Invoices

3.5 Purchase Price and Margin

3.6 Authorization to the Factor for Charges and Obligations

3.7 Procedures for approved account invoices

3.8 Reserve of Facial amounts of invoices over finance provided

3.9 Receipt of Goods without Dispute

3.10 Credit Terms

3.11 Solvency and law provisions

Further Reading

1 – UNDROIT Convention on International Factoring

2 – Factoring – A Tool for Trade Financing

3 – Introduction to International Factoring and Project Finance

4 – Freight Factoring

5 – Factoring : A Better Alternative

6 – Factoring and the Firm Value

Forum Assignment



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