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 - Unidroit Convention on International Factoring, Ottawa, 1988 [English]

Case law - Manhattan Factoring Corp v. Orsburn, Supreme Court of Arkansas, Arkansas, USA, 1965{"fulltext":["factoring"],"documentcollectionid2":["GRANDCHAMBER","CHAMBER"],"itemid":["001-71299"]} - Capital Bank Ad v. Bulgaria, European Court of Human Rights, Strasbourg, 2005

Organisations and associations - International Factoring Association - American Factoring Association (USA) - The International Factors Group

Online Publications - Conner, C., 2013, 'Money, money' - How Alternative Lending Could Increase Your Company’s Revenue in 2013, Forbes - Angeles, S., 2014, Factoring Offers Financing Alternative for Small Businesses, Business News Daily - Taulli, T., 2008, The Pros and Cons of Factoring, Business Week - Onyeagoro, C., 2013, Factoring Versus Accounts Receivable Financing: What Your Business Needs to Know, FundWell - Magos, A., 2014, How Factoring Can Improve Your Small Business Cash Flow, BizFilings


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