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The discount rate is the fee a factoring company charges to provide the factoring service. Since a formal factoring transaction involves the outright purchase of the invoice, the discount rate is typically stated as a percentage of the face value of the invoices. For instance, a factoring company may charge 5% for an invoice due in 45 days.
Bankrate insight. Some factoring fees are based on tiered rates. For instance, the factoring company may charge a starting rate of 2 percent up to 30 days and an additional 1 percent for every 10 ...
But if the customer paid off the invoice in the fourth week, you might see a 3-percent fee, meaning a payment to the factoring company of $300. Different situations can also change the factoring ...
A factor is a mercantile fiduciary transacting business that operates in their own name and does not disclose their principal. A factor differs from a commission merchant in that a factor takes possession of goods (or documents of title representing goods, such as a bill of lading) on consignment, but a commission merchant sells goods not in ...
The reverse factoring method, still rare, is similar to the factoring insofar as it involves three actors: the ordering party (customer), the supplier, and the factor. Just as with basic factoring, the aim of the process is to finance the supplier's receivables by a financier (the factor), so the supplier can cash in the money for what they sold immediately (minus any interest the factor ...
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