Why don't they use factoring?
Article Abstract:
Peat Marwick Mitchell describes factoring as "finance linked to management service." Factoring techniques, usage by British corporations, and methods for selecting a factoring company are discussed, and 24 factoring firms in and around London are listed. In an Accountancy magazine survey of the top 1000 British corporations according to The Times, only three of the 60 firms responding admitted to using a factor to obtain financing; however, 27 of these respondents viewed factoring as a means for improving cash flow. Contractual forms of factoring (recourse versus nonrecourse factoring), types of factoring (agency factoring, bulk factoring, invoice factoring, and invoice discounting), and the three services offered by factors (finance, risk control, and sales ledger administration) are explained. Six rules to follow when selecting a factor are provided: (1) examine the proposed computation of factor service fees relative to company debt amounts, (2) determine whether the factor is to be paid before the company receives funds from the factor, (3) review calculations related to final due dates of debts sold to factors, (4) ensure the factor agreement provides for adjustment of the maturity date system, (5) ascertain whether the factor offers prepayment guarantees for a percentage of the debts handled, and (6) include a period of notice for terminating the agreement.
Publication Name: Accountancy
Subject: Business
ISSN: 0001-4664
Year: 1987
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The success factor
Article Abstract:
Factoring has become a means by which start-up companies can obtain both capital and financial advice. There are three types of factoring firms, which typically provide finance for up to 80% of outstanding invoices. Full service factoring firms that run their clients' sales ledgers, including receiving invoices, sending out statements, and receiving cash for payment of invoices. Sales finance factoring firms, also known as agency or bulk factoring firms, provide financing and receive payments for invoices, but the client is responsible for the daily maintenance of the sales ledger. Invoice discounting services differs from full service factoring in that clients are responsible for their sales ledger. Invoice discounting factoring firms provide credit, payments are paid by the client to the factoring services' bank account, but the clients run their own sales ledgers.
Publication Name: Accountancy
Subject: Business
ISSN: 0001-4664
Year: 1991
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Factoring: a catalyst for growth and profits
Article Abstract:
Factoring is the service provided by companies that purchase other companies' trade debts as they fall due, which in effect replaces the selling company's debt with a sales ledger, and transfers collection problems to the purchaser. In Great Britain, factoring firms handle approximately 4.6 billion pounds sterling in trade debts annually and serve an estimated 4,000 selling companies. In 1985 the British factoring industry grew 22 percent over previous year levels. The Association of British Factors, founded in 1976 is described and the involvement of clearing banks in the factoring industry is discussed. Factors in Britain charge fees that reflect from 0.5 percent to 3.5 percent of the selling company's total sales.
Publication Name: Accountancy
Subject: Business
ISSN: 0001-4664
Year: 1986
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