Factoring is a form of receivables financing where a seller of goods and/ or services assigns its receivables to a ‘Factor’ that performs at least two of the following functions on behalf of the seller: mainly credit protection, discounted prepayment against account receivables, collections of factored debits, credit management and sales ledger administration and analysis.

Purpose of Factoring:

Factoring offers an alternative instrument that enables African traders of manufactured items, handicraft and items normally traded on open account basis to trade competitively. This product can facilitate the participation of African manufacturers in the expected consumption boom in Africa to be boosted by rising incomes.

 

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