Trade Finance Advisory


Factoring, also known as Receivables Finance or Invoice Discounting, is a payment mechanism whereby the Exporter sells their receivables (outstanding invoices) at a discount to a bank or other finance provider (the Factor). As a result, the Factor becomes the owner of the underlying receivables and takes on the risk of collecting the payment from the Importer. Therefore, the Importer needs to settle the payment directly with the Factor, not the Exporter.Factoring (Receivables Finance or Invoice Discounting)The buyer is normally made aware of the Factoring, which can be provided with or without recourse, depending on the underlying receivables, creditworthiness, credit insurance or lack thereof, and governing law.

The Exporter enters into the factoring agreement with the Factor, which normally is a bank or other specialized finance providers with experience in the receivables financing market. The Factor then sends the Importer a written Notice of Assignment to notify the debtor that the right to collect payment invoiced by the Exporter has been assigned to the Factor. Upon receiving such notice, the assignment of debt to the Factor becomes legally effective and binding.

We at MPG are intimately familiar with Factoring transactions and we are able to assist SMEs as well as large joint-stock companies with their cash flow needs, thus increasing their competitiveness in the marketplace.


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