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Who collects the debt due, the factor or my business?

Technology/Functionality
Answer

Who collects payment from the account debtor is determined by which type of factoring agreement you have entered into. With an invoice factoring arrangement, the factor contacts the customer, issues a statement and collects funds directly into the factor’s own account. With invoice discounting, on the other hand, your business remains in control of collecting payments from customers and all associated bookkeeping tasks. With both invoice factoring and invoice discounting arrangements, it is often possible to enter into a confidential contract, which ensures that customers are not made aware that invoices have been sold to a factor, thereby allowing your business to maintain a direct relationship with your customers.

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An additional question: Respond to this Question

  • Why turn to a factor rather than seek a bank loan?
  • How does a factoring finance arrangement work?
  • What's the difference between factoring with recourse and factoring without recourse?
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  • What does a factoring company do in the case of nonpayment?
  • Do my customers know of the factor’s involvement?
  • What are the requirements for invoice discounting?
  • Is there any collateral requirement for factoring?
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  • Who do I turn to if I have a dispute with my factoring company?
  • I have overseas clients; can I factor international invoices?
  • Is it easy to terminate a factoring arrangement?
  • What regulations apply to factoring companies?
  • What does working capital mean to your business?
  • What is the difference between factoring and bill discounting?
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