Definition

Factoring (banking law and finace law) (Ro.: factoring, Fr.: affacturage, n.m., Gr.: πρακτορεία επιχειρηματικών απαιτήσεων, Cz.: faktoring) (See also: accounts receivable financing, cash flow, lending transaction) = a funding source through which a company obtains capital by selling its accounts receivable, at a discount, to a financial institution. 

This type of financing helps companies to maintain the cash flow when their resources are blocked in invoices. The risk of non-collecting the debt is assumed by the financial institution.

 

Useful links

Legislation

http://www.unidroit.org/instruments/factoring - Unidroit Convention on International Factoring, Ottawa, 1988 [English]

Case law 

http://law.justia.com/cases/arkansas/supreme-court/1965/5-3391-0.html - Manhattan Factoring Corp v. Orsburn, Supreme Court of Arkansas, Arkansas, USA, 1965

http://hudoc.echr.coe.int/sites/eng/Pages/search.aspx#{"fulltext":["factoring"],"documentcollectionid2":["GRANDCHAMBER","CHAMBER"],"itemid":["001-71299"]} - Capital Bank Ad v. Bulgaria, European Court of Human Rights, Strasbourg, 2005

Organisations and associations

http://www.factoring.org/ - International Factoring Association

https://www.americanfactoring.org/ - American Factoring Association (USA)

http://www.ifgroup.com/ - The International Factors Group

Online Publications

http://www.forbes.com/sites/cherylsnappconner/2013/04/10/money-money-how-alternative-lending-could-increase-your-companys-revenue-in-2013/ - Conner, C., 2013, 'Money, money' - How Alternative Lending Could Increase Your Company’s Revenue in 2013, Forbes

http://www.businessnewsdaily.com/1211-factoring-small-business-loan-alternatives.html - Angeles, S., 2014, Factoring Offers Financing Alternative for Small Businesses, Business News Daily

http://www.businessweek.com/stories/2008-10-03/the-pros-and-cons-of-factoringbusinessweek-business-news-stock-market-and-financial-advice - Taulli, T., 2008, The Pros and Cons of Factoring, Business Week

http://www.thefundwell.com/2013/01/factoring-versus-accounts-receivable-financing-what-your-business-needs-to-know/ - Onyeagoro, C., 2013, Factoring Versus Accounts Receivable Financing: What Your Business Needs to Know, FundWell

http://www.bizfilings.com/toolkit/news/finance/factoring-improves-cash-flow.aspx - Magos, A., 2014, How Factoring Can Improve Your Small Business Cash Flow, BizFilings

Publications

Bjørn, B., 1995, Factoring: a comparative analysis: the legal and practical implications of factoring as practised in the United States, England, and Denmark, Copenhaga, Økonomforbundets

Klapper, L., 2005, The Role of Factoring for Financing Small and Medium Enterprises, Washington DC, The world Bank

National Commercial Finance Conference, 1980, Factoring: past, present, & future, New York, National Commercial Finance Conference

Salinger, F. R., 2006, Factoring: the law and practice of invoice finance, London, Sweet & Maxwell

Salinger, F. R., 1991, Factoring Law and Practice, London, Sweet & Maxwell

 

By Ioana Bărăian