Ads:
Briefgold
|
 |
In factoring the factor buys the claims or trade debts of other businesses at a fee. In Germany the fee fluctuates according to risk and effort between 0, 7 and 2, 8% of the gross turnover of the purchased trade debt. Before purchasing the trade debts, the factor examines the credit worthiness or financial standing of the clients. The factor acts as surety for the solvency of the persons to whom he sells. In other words he takes over the risk of loss at the debtor’s inability to pay, as well as all efforts that are connected to the payment process.
The factor receives liquid funds, which improves turnover financing, as well as the credit worthiness of the bank. Contrary to a credit insurance, which also provides protection against payment arrears, it is particularly the improvement of the liquidity that makes factoring interesting to medium sized companies, which often have a high amount of outstanding debts. The assignment of claims or trade debts to factors can improve this situation considerably.
|
|
|
