Frequently Asked Questions

In note-secured bank loans, the notes serve as collateral for the loan and continue to be tracked as notes receivable on the balance sheet's asset side after being endorsed to the bank as collateral, while the loan used is shown as a financial liability. In factoring transactions, however, the note directly represents the receivable tied to the invoice and is transferred to the factoring company by way of an assignment endorsement. The assigned note amount is removed from notes receivable on the balance sheet and converted to cash, and is not shown among financial liabilities.

Receivables from companies worked with on open account are transferred in advance to the factor through a factoring agreement, which is essentially an assignment contract. Later, when the invoice is issued, a note is added stating that the receivable arising from this invoice has been assigned to the factor and that payment must be made to the factor's account, and the debtor is notified accordingly.

Depending on the nature of the transaction, there are two types of costs. The first is the commission and expenses paid for the intermediation of the collection of the receivable and/or the collection guarantee provided. The second is the interest paid if the advance payment facility is used.

Of course you can. The financing function is only one of factoring's three functions, alongside its service and guarantee functions. It is possible to use only the collection and/or guarantee functions without using the financing function.

In factoring transactions, the advance payment is made by the factor based on the assigned receivables, generally not exceeding eighty percent of the receivable.

This depends on the agreement between the customer and the factor. Collection follow-up may be carried out by the customer, or by the factoring company with the costs charged to the customer.

No. While it is generally preferable for receivables to be assigned in bulk and in advance, there is no such obligation.

Regulations require that receivables subject to factoring be based on an invoice or similar document. This should be understood as the invoice being the standard basis. However, receivables for which issuing an invoice is not legally or technically possible, but which can be substantiated with a similar document, can also be factored.

There are three types of service: financing, guarantee and collection. Depending on the agreement made with the customer, one or all three services may be used. Financing can be summarized as paying the customer an advance on a certain portion of deferred receivables; guarantee as securing the receivable in the event the buyer company faces payment difficulties; and collection as managing, collecting and following up on receivables and reporting to the customer.

In general, capital goods, perishable products and receivables arising from intra-group sales are not suitable for factoring.

Recourse factoring is a form of factoring in which the factoring company does not assume the risk of non-payment of the receivable; financing and collection services are provided under this model. If the receivables are not paid, the factoring company has the right to seek recourse from the seller company and demand repayment of the advance made.

In general, factoring can be carried out for receivables with maturities of up to 120 days, though longer-term receivables may also be evaluated by factoring companies.