Types Of Factoring

While types of factoring vary based on the needs of the companies, their business models, and their relationships with the buyers, basically they can be examined as non-recourse/recourse and disclosed/undisclosed factoring 

Non-Recourse Factoring 

This is the form of factoring in which guarantee payment is made to the seller under the receivables guarantee, in case there are no defects or claims with respect to the products and the receivables assigned by the factoring company are secured by the factoring company and not paid by the buyer due to the bankruptcy.

Recourse Factoring

This is the type of factoring in which the risk of non-payment of the receivables rests with the selling company and in case the buyer does not make the payment, the factoring company has the right to demand the payment from the seller. The collection tracking can be carried out by the factoring company, if demanded. 

Disclosed factoring 

It is the factoring transaction in which the seller notifies the buyer that the receivables are transferred to the factoring company and in which the buyer pays the invoice amounts to the factoring company instead of the seller on the due date of the invoice. 

Undisclosed Factoring 

It is the factoring transaction in which the seller does not notify the buyer that the receivables are transferred to the factoring company. In this case, the collection is carried out by the seller.