Cost of Factoring


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Factoring Costs

Factoring costs are comprised of factoring finance costs and factoring commissions. The content and coverage of the factoring agreement between the factoring company and the client is a major determinant of the costs as the factoring service may be structured in various ways in terms of the services given and the actual operation flow of the factoring transaction

Factoring Companies may offer different service alternatives to its clients for transfer of receivables. These alternatives include receivables collection services, receivables management services (that include screening and monitoring of receivables) and receivables finance services (payment of a portion of receivables before maturity). Naturally, factoring costs may differ significantly in line with the product offering selected by the client. Definition and methodology of the factoring costs as part of the factoring agreements prepared by factoring companies are explained below:

1. Factoring Finance Costs

Factoring finance cost is calculated based on the amount of funding provided between the down payment and maturity dates in line with market conditions and invoiced to the client stating total funding amount, number of days and market interest rates.

2. Factoring Commissions

The factoring company receives commission income based on the credibility search /screening / monitoring services, risk assumed and collection services. The level of the commission income is calculated considering factors such as number of buyers from the client, credibility of the buyers of the client, invoice amounts and number of invoices, maturity of receivables, and the overall factoring volume of the client.

What is Factoring
Tracks funds collection undertaken by us with respect to your rates receivable and since Management is arranged by us, shall give rise to easier management of cash flow;