Factoring is a combination of financial and credit management services allowing a company to improve its credit portfolio and ability to penetrate the market in both qualitative and financial terms.
These services include:
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Credit administration, management and collection
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Legal assistance in credit recovery
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Assessment of customers' dependability
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Guarantee of successful conclusion of operations
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Advance payment of credits before they fall due
Factoring involves the following parties:
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The transferor, that is, a party holding a credit with another counterparty who transfers this credit to the Factor
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The transferee, which is the factoring company
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The transferred debtor, which is the party required to pay the transferred debt to the transferee