Bank Guarantee/Factoring May 19, 2016
Many businesses allow their clients to pay of a terms arrangement. That is within 30, 60 or 90 days from delivery of the goods or services.
These are the business’s ‘debtors’. It is not unusual for debtors to not pay the monies owed in a timely fashion. Therefore the supplier of the goods may be owed many thousands of dollars from the debtors who are ‘tardy’ payers.
Clients experiencing working capital issues may choose to ‘sell’ their debtors to a lender, who will typically forward to the client up to 80% of what the debtors owe in one lump sum. The lender and the client will then set out to have the debtors pay their monies owed.
Debtors finance has a vital role to play within the business/commercial field, but it is an expensive form of finance.
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