Is there any collateral requirement for factoring?

Publication date

17/02/2014

Last updated

18/01/2021

FAQ
Reading time: 1 mins
Factoring

As with all financial services, some criteria do need to be met in order to ensure that the factoring contract will be beneficial and sustainable. Invoice factoring is a form of lending , and as such, you may need to provide collateral to guarantee repayment of a cash advance, if the debt cannot be collected on an invoice. However, this may only be required if you are trading with customers with a bad credit history and normally only with recourse factoring agreements (where any bad debt remains the responsibility of your business), so it is certainly not a guaranteed prerequisite. Make sure you check your offer terms and contract thoroughly for any collateral requirements.

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