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Factoring Companies Guidebook


Page 1 of 105

This guide contains an extensive, but not necessarily exhaustive list of issues, which can affect an invoice finance companies book debt security, and therefore their ability to collect funds advanced against that security. In this guide, we will use the terms such as Factorability, Factor, etc and in all cases unless otherwise specified, this refers to both Invoice Discounting and Factoring. Where the term Client or Prospect is used, they are also often interchangeable.

Upon review, it will also be noted that the concerns raised are not mutually exclusive, but there is a great deal of overlap between issues, therefore it is unwise to consider specific matters in isolation. Where these overlaps occur, you will find the other areas highlighted in bold and inverted commas, e.g. "Liquidated Damages".

Unfortunately, the method of dealing with these potential risks is not always clear-cut and is often grey, rather than black or white, depending upon the surrounding circumstances. It is because of the number of grey areas that these matters must be identified, quantified, addressed and dealt with promptly. Timing is very often of the essence in whether an invoice finance company are able to collect-out against their security.

Throughout this guide we have used a common format to help you understand the issues associated with the subject headings. These are a definition, our concerns, how to identify them and where applicable their treatment. However, please remember that this is written from the perspective of an invoice finance company.

Client - this is the business that is the client of the invoice finance company.

Customer - this is the customer of the client (i.e. the debtor)

At the end of this guide, you will also find a sector guide which gives examples of potential risks within specific industries.

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