- Home
- Bankruptcy and Bankruptcy Code
- Business Entities
- Departmental Operations
- Credit Practices
- Collection Practices
- Financial Analysis
- Financing Methods
- Acceptances
- Bankers' Acceptance Financing
- Contra-Accounts
- Factoring; Factoring Companies; Factoring of Accounts Receivable
- Factoring of High Risk Accounts
- Factoring Companies; Accounts Receivable Factoring; Factoring
- Finance Companies
- Floor Plan Financing
- Legal Framework of Loans; Secured Debt; Borrowing
- Non-Recourse Loans
- Project Financing
- International Credit
- Laws and Regulations
- Payment Methods
- Performance Measures
- Security Instruments
- Career Management, and Job Change
- Credit Website Tools
- Upcoming Educational Events
- Credit and Collections Tools and Tips
- Tips on Creating Better Emails
- Generating Effective Credit Correspondence
- Exporting
- Accounting
Factoring of High Risk Accounts
It is possible to sell the receivables from less creditworthy accounts receivable to a factor. However, it is likely that the factor would have the same concerns as the creditor. If the factor is concerned about the collectability of the accounts receivable balance, they may be unwilling to purchase (to factor) the A/R for that customer even if the factor does so with recourse. Another option that the factor may consider involves purchasing only a portion of the A/R balance from the debtor identified as high risk. A factor might also consider factoring the A/R at a larger discount. For example, if the factor normally purchases the A/R at a 5% discount off the net value of the invoice, the factor may offer to purchase the A/R on the high risk account at a discount of 10% or more.
© 2010 by Michael C. Dennis. All Rights Reserved