Concept of Factoring
Factoring activity is one of the most important non-bank financial instruments that provide the required cash flow for projects to be reused in activity. Most projects operating in local or international markets have future receivables from their customers as a result of their sales. Factoring allows these projects to sell these commercial rights to provide the necessary funding.
The rate of growth of factoring activities increased by 41%
Advantages of Factoring Activity:
- Providing the current values of the commercial papers in cash so that the production cycles can be financed continuously and reduce the financial burdens of the company.
- Provide a liquidity ratio of up to 100% in advance of the value of the financial rights.
- Ensuring cash flow and financing without having to wait until the date of the commercial paper or collecting bills's price.
- Factoring is one of the activities of financial tools to finance small projects.
Factoring activity forms:
- Factoring with recourse
- Factoring without recourse