What is factoring

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What is factoring?

Factoring is a financial tool that allows immediate payment of claims with a deferred payment deadline, and provides a financial operation risk elimination, more efficient claims management, and improvements of financial liquidity.

Factoring is suitable for companies of all sizes, with the following procedure: the factor (company Achilles d.o.o.) pays an advance to the assignor, usually in the amount of 80% of the invoice, reduced by the invoice fee, and then receives payment from the obligor.

Depending on the type of the obligor, we have two types of factoring:

• Factoring without recourse, where the factor insures the claims of the assignor prior to financing, and the claims are paid by the factor, if the obligor does not pay the claims by the payment deadline.
• Factoring with recourse is used mainly when the assignor has multiple customers with a lower credit rating, whereby the assigner is liable for the payment of obligations incurred by the factor.

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