This financial and commercial contract is a synallagmatic contract, successive, for a consideration. It is subject to the rules of common law of contracts (contracts must include the following clauses: object, cause, capacity, consent).

Factoring is a commercial management technique at the service of the company: the factor records the invoices, raises the debtors, proceeds to the collection and provides the service of litigation in case of non-payment. Factoring is also a technique for financing short-term receivables (up to 180 days) when the factor pays in advance all or part of the amount of the receivables transferred.Fine options for the factoring of receivables now.

Factoring or factoring is the technique by which:

A company (themember) transmits the claims it has on its customers (the receivables sold)

To a factoring company (factor)

In exchange for the payment of a commission, the participant obtains a guarantee against the risk of unpaid, the management of his receivables and the immediate financing of his receivables.

Generally the services included in the factoring contract are as follows:

The risk prevention and security against unpaid, ensuring insolvency compensation up to 100% of the assigned receivables and guarantees.

The receivables management, registration for collection of bills: the factor undertakes to boost debtors and manages the regulations of the latter. He initiates contentious proceedings if necessary. Companies, freed from these administrative constraints, can refocus on their core business.

Factors offer immediate financing of receivables, making it possible to transform the receivable into real and available cash.

What is the interest of factoring?

In addition to the services included in the factoring contract, factoring has three other advantages:

It is more advantageous than conventional insurance. Indeed, it can cover the claims at 100%, against 60 to 85% for the insurance. In addition, it provides cash immediately, against a period of three to six months for insurance. Finally, there is no ceiling for compensation in factoring, whereas insurance provides for one, from 10 to 25 times the annual premium.

The company retains exclusivity over the commercial relationship with customers. It can therefore negotiate the terms of sale (prices, deadlines, rebates …).

The disappearance of the receivables item leads to a decrease in the working capital requirement. The company can then settle its bills for cash and obtain better terms of purchase.

How are the risks transferred?

The subrogated factor invested with the receivables of which it becomes the owner, takes care of the recovery and guarantees the good end. If the debtor is insolvent, the loss is therefore for him.The facturer takes the exact legal place previously occupied by the member and becomes the direct and personal creditor of the member’s clients.

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