FACTORING

What Is Factoring?

Factoring helps businesses convert their deferred sales into cash without waiting for maturity. This speeds up cash flow, supports the balance sheet structure and allows businesses to manage a healthier growth process. In the most general sense, it is the assignment of deferred receivables arising from goods and service sales to a factoring institution, and the management of these receivables by that institution. This transaction takes place between the seller company, the debtor company and the factoring company.

Who Are the Parties to a Factoring Transaction?

Factor

The financial institution that acquires the receivables by assignment.

Seller Company

The business that becomes a creditor by selling goods or services.

Debtor Company

The company that incurs a payment obligation by purchasing goods or services.

How Does a Factoring Transaction Work?

The seller company applies to a factoring company to have its deferred receivables from goods or service sales evaluated.
The factoring company evaluates the receivables and the debtor company's standing, then presents the seller company with a financing offer.
A factoring agreement is signed between the parties and the documents required for the assignment of receivables are completed.
The factoring company makes an advance payment to the seller company against the receivables it has acquired.
When the receivable matures, collection is made from the debtor company and the process is completed.

Types of Factoring

Domestic Factoring

Converting receivables from sales where both buyer and seller operate within Turkey into cash.

Collection Management

The tracking and collection of receivables handled by the factoring company.

SME Solutions

Flexible factoring solutions tailored to the needs of small and medium-sized enterprises.

Public Sector Financing

Converting the receivables of companies supplying goods or services to public institutions into financing.

Supplier Finance

A fast, cost-effective financing model offered to the suppliers of buyers with a strong credit standing.

Frequently Asked Questions About Factoring

What is the difference between factoring and a bank loan?

With a bank loan, a business borrows cash and the amount appears as a financial liability on the balance sheet. With factoring, a deferred receivable is assigned to the factoring company and converted into cash; the transaction is based on the transfer of a receivable, not on borrowing.

Which businesses is factoring suitable for?

Any business of any size that sells on credit terms, holds invoiced receivables and wants to strengthen its cash flow can benefit from factoring.

What determines the cost of factoring?

The cost of factoring is assessed based on criteria such as the maturity of the receivable, the debtor company's financial standing and the transaction volume. Commission and fees are communicated in detail at the offer stage.

What documents are required for a factoring transaction?

During the application process, company identification and authorization documents, trade registry records, and the invoice and contract details related to the receivable are requested. The full document list is available on our Transaction Documents page.

How long does the process take after the factoring agreement is signed?

The timeline depends on how quickly the documentation is completed and the outcome of the evaluation; the advance payment is made to the seller company once the agreement and assignment procedures are finalized.