Factoring

Factoring

Sources of Funds

Published in David C. Kimball, Robert N. Lussier, Entrepreneurship Skills for New Ventures, 2020

Factoring, whichinvolves selling your receivables to a buyer, such as a commercial finance company, to raise capital and is very common in industries where long receivables are part of the business cycle, such as the clothing industry. You can still make money on your receivables—even though you will share the money with the commercial finance company.

Evolutionary multiplayer game analysis of accounts receivable financing based on supply chain financing

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Journal Information

Published in International Journal of Production Research, 2021

Bo Yan, Zhuo Chen, Chang Yan, Zhenyu Zhang, Hanwen Kang

With the development of SCF, there are different SCF modes. Table 1 lists some SCF modes related to our work. Trade credit arises when a buyer delays payment for purchased goods or services (Seifert, Seifert, and Protopappa-Sieke 2013). The Credit Guarantee Schemes (CGS) are designed as multilateral agreements for the interaction of lenders, guarantors and borrowers (Boschi, Girardi, and Ventura 2014). Factoring enables a firm to sell its account receivable to a third party for immediate cash receipt (Wang, Wang, et al. 2020). The customer becomes the debtor and need to pay directly to the third party. Factoring addresses the opacity problem by focusing primarily on the quality of the obligor, rather than the ‘borrower’ (Berger and Udell 2006). Similarly, reverse factoring is another factoring mechanism that downstream customers cooperate with banks to provide loans to upstream suppliers (Wang, Wang, et al. 2020).

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Sources of Funds

Evolutionary multiplayer game analysis of accounts receivable financing based on supply chain financing