Following are the types of domestic factoring
- This is also known as “Without Recourse Factoring”
- It offers all types of service namely finance, sales ledger administration, collection, debt protection & customer information
- It is same as full factoring, except debt protection service
- Here client’s liability to factor is not discharged until the customer pays in full
- When no pre-financing of the receivables is done, but the factor undertakes to pay the amount due only on maturity of the credit period, it is called maturity factoring.
- This is only a pre-payment & not an advance.
- This could be with or without recourse.
- In this agreement, factor provides advance at an agreed rate of interest to the client on uncollected & non-due receivables.
- It is also referred to as non-notification factoring.
- Here, the customer (buyer) is not notified about the receivable being pre-financed.
- Debt collection is organized by the client who makes payment of each invoice to the factor if advance payment had been received earlier.
- In this arrangement, the only facility provided by the factor is finance.
- The client collects the payment from the customer & hand it over to factor
- Generally, in this method, the client is a reputed company who would like to deal with its customers directly, including collection, & keep this factoring arrangement confidential.