BANKING AFFAIRS

Detailed explanation-1: -Factoring is commonly referred to as accounts receivable factoring, invoice factoring, and sometimes accounts receivable financing. Accounts receivable financing is a term more accurately used to describe a form of asset based lending against accounts receivable.

Detailed explanation-2: -Answer: (1) Factoring is commonly identified as accounts receivable factoring, invoice factoring, and sometimes accounts receivable financing. The maximum debt period permitted under factoring is 150 days.

Detailed explanation-3: -Primarily, there are two types of factoring, recourse factoring and non-recourse factoring.

Detailed explanation-4: -Definition: Factoring is a type of finance in which a business would sell its accounts receivable (invoices) to a third party to meet its short-term liquidity needs. Under the transaction between both parties, the factor would pay the amount due on the invoices minus its commission or fees.

Detailed explanation-5: -Example of factoring in finance A company has a receivable from a customer of £2, 000 and sends an invoice to the customer on 09/05/2022. The payment period is 30 days, i.e. until 08.06. 2022. The company sells the receivable to a factoring company and agrees recourse factoring with it.