factoring

It is a financial instrument that provides financing, collection / receivable management and guarantee services to the seller company by assigning the receivables arising from the sale of goods and services.

Parties in Factoring Transaction

FACTORING COMPANY : The institution providing factoring services

CUSTOMER: The party benefiting from the factoring service (seller)

BORROWER : The debtor of the receivable which is the subject of the assignment (buyer)

In order to provide factoring services, a factoring agreement must be signed between the factoring company and the customer.

Which Conditions are Required for a Transaction to be Factoring,

• A product delivered / to be delivered by the seller to the buyer or a service given / to be provided,
• A document (invoice, contract, etc.) containing information such as the description, amount, payment term of this product or service.
• The fact that this document has been assigned by the seller to a factoring company before its due date.

How is factoring done?

1. Step: The customer sends the invoice regarding the receivable he wishes to assign and the check or bill, which is the payment instrument for the collection of the receivable, to the factoring company.
2. Step 2: If the factoring company's evaluations of the customer, debtor and the transaction are positive, the customer is informed that the transaction has been approved.
3. Step 2: A factoring contract is signed between the factoring company and the customer.
4. Step: Customer; It delivers documents such as invoice, check/note, receivable notification form, payment order, which are the subject of the transaction, to the factoring company.
5. Step 2: Payment is made to the customer's account by the factoring company.