Factoring Dictionary

• Assignment Clause

  A note attached to the invoices assigned to the factor confirming the assignment and specifying the place of payment.

• Average Term

  The average collection period of the invoices / receivables assigned to the factor.

• Buyer Information Form

  The form which contains the information of the receives to be investigated and the limit information to be requested.

• Correspondent Factor

  The factor in the other country in two-factor system.

• Customer

  The seller who makes use of factor’s services.
  

• Debtor

  Real persons or legal entities that are liable to pay the price of the goods or services bought from the customer.

• Debtor Transaction Volume

  Maximum invoice total that may be accepted as assignment for each debtor of the customer.
  

• Dispute

  Commercial and legal defects, objections, disputes and physical imperfections that may arise in the goods and services.

• Export Factor

  The factor that serves to the export of its customer either directly of through a correspondent in the destination country.

• Factor

  Factoring company to which the customer assigns and transfers its receivables by the factoring agreement.

• Factoring Agreement

  The agreement signed between the customer and the factor specifying the terms and legal framework of the factoring transactions.

• Factoring Commission

  Commission fee that the factor receives for each invoice.

• Factoring Fee

  The amount of interest on the advance payment which accrues on monthly basis.

• Factoring Guarantee Limit

  Maximum amount of guarantee allocated by the factor for each debtor.

• Funds in Use

  The sum of the invoice amounts which are pre-paid to the seller but not collected yet, factoring commission, factoring fee and other expenses.

• Import Factor

  The factor that make collections from the debtors in its own country for a correspondent factor in a foreign country.

• Irrevocable Factoring

  This is the form of factoring in which the factor fully assumes the risk of non-payment of the receivable within the specified limits. In case of failure of the buyer to pay the forward receivables due to financial difficulty; factor does not recourse to the seller company and demand the refund of prepayment made; furthermore, it makes the payment of the outstanding balances to the seller company, if any, after deducting the factoring commission, factoring fee and bank expenses. In case seller company does not want to make use of financing service, the whole invoice amount covered by the guarantee is paid to the seller company on 90th day from the date of maturity after factoring commission and bank expenses are deducted.

• Limit Approval Notification

  The notification of the guarantee limit allocated by the factor on the basis of the debtor to the customer.

• Maximum Factoring Volume

  Maximum total value of the invoice amounts to be assigned.

• Notified Factoring

  This is the form of factoring in which the customer company notifies its buyers that it has assigned its receivables arising from forward sale to the factoring. The customer notifies the buyer about the assignment in writing and the confirmation of the buyer is received. An assignment note is attached to each invoice issued.

• Prepayment

  The amount of prepayment made to the customer on the amount of the invoice accepted by assignment.

• Receivable

  The consideration of the goods sold or services rendered by the customer.

• Receivable Notification Form

  It is the document itemizing the receivables (invoices) that have been assigned by factoring agreement.

• Revocable Factoring

  This is the form of factoring in which the factor does not assume the risk of non-payment of the receivable. Only financing and collection service is provided. In case of failure of the buyer to pay the receivables assigned to the factoring company; factor recourses to the seller company and demands the refund of prepayment made.

• Seller Information Form

  The document specifying the amount and terms of the goods or services sold by the customer.

• Unnotified Factoring

  This is the form of factoring in which the seller company does not notify its buyers that it has assigned its receivables arising from forward sale to the factoring, the assignment note is not attached to the invoices sent to the buyers, collections are made by the seller company, and the factoring company only offers guarantee and financing services.