Domestic Factoring:

Following are the types of domestic factoring

  1. Full 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
  2. Recourse Factoring

    • 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
  3. Maturity Factoring

    • 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.
  4. Advanced 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.
  5. Undisclosed Factoring

    • 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.
  6. Invoice Discounting

    • 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.