What is the factoring ?

Factoring is a type of mutual agreement which allows the firms that do business in future receivables basis to transfer their rights to a third party (factor) in order to benefit current cash flows from that party (factor).

Factoring agreement holds between the factor, buyer and the firm that provides services or products (seller).

Factoring process briefly arises from the invoiced products and services that can be transferred to a factoring services company.Depending on the agreement between both parties, the seller could transfer its risk of collecting its receivables to the factor and receive cash inflows for its future receivables.

Factoring process could also be defined as management of future receivables.From this aspect the seller can utilize;

·  Financing,

·  Assurance,

·  Colection

services of factoring company.