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<ManualTopic ID="/baanerp/tf/onlinemanual/000423" xml:lang="en">
   <Header>
      <Title>Factoring of accounts receivables</Title>
      <Keyword type="header" order="d1e1985787">
         <Level1>Factoring</Level1>
         <Level2>accounts receivables</Level2>
      </Keyword>
   </Header>
   <GeneralSection>
      <Paragraph>The <Link href="/baanerp/tf/glossary/glossary#000429" role="glossary">factor</Link> is a business partner
		who buys your receivables and pays for it. The factor in turn will collect the
		amount from your customers (pay-by business partners). If the <Link href="/baanerp/tf/glossary/glossary#000435" role="glossary">original pay-by business partner</Link> partner is notified to pay directly to the factor, the original
		pay-by business partner of the sales invoice is replaced by the factor.</Paragraph>
      <Paragraph>You usually receive a <Link href="/baanerp/tf/glossary/glossary#000430" role="glossary">factor's advance</Link> from the factor against the receivables
		factored with it. Usually, the factor's advance is 70% to 80% of the factored
		amount.</Paragraph>
      <List>
         <ListIntro>Factoring can be:</ListIntro>
         <ListItem>
            <Emphasis>With recourse</Emphasis>: The factor makes a loan
		  against a receivable. Your company continues to assume the credit risk, and you
		  must reimburse the factor if the customer does not pay. If the customer's
		  credit check is not favorable, factoring with recourse can be used.</ListItem>
         <ListItem>
            <Emphasis>Without recourse</Emphasis>: The factor purchases the
		  value of the receivable, and takes the risk that the customer will not pay the
		  invoice. To avoid bad debts, the factor usually performs a credit check on the
		  customer before deciding to purchase the receivable.</ListItem>
      </List>
      <Paragraph>You can factor the receivables as and when they arise, or you
		can have a general agreement to factor receivables of specific customers for a
		given period of time and for a given credit limit. If you factor the
		receivables as and when they arise, your customer is notified to pay to the
		factor after the customer has received your invoice. If you have a general
		agreement to factor the receivables, your customer is notified to pay to the
		factor by printing the factor’s address on the invoice as the pay-to address.</Paragraph>
      <Paragraph>You can factor your receivables with more than one factor.
		Therefore, you can assign the receivables of one business partner to more than
		one factor.</Paragraph>
      <Paragraph>If your customer fails to pay the invoice and if factoring with <Link href="/baanerp/tf/glossary/glossary#000425" role="glossary">recourse</Link> applies, you must reimburse the amount due to the
		factor. In such a case, you will try to recover the amount due from the
		original pay-by business partner. As a result, the information about the
		original pay-by business partner must remain available in the system.</Paragraph>
      <Paragraph>If you create a credit note for your customer, the amount
		receivable from the business partner decreases. As and when credit notes arise,
		they are sent to the factor so that he is informed of the actual outstanding
		amount receivable from the business partner.</Paragraph>
      <Paragraph>In a multicompany structure, the factoring of accounts
		receivable is controlled per financial company. If you decide to factor your
		receivables, you can switch on the accounts receivable factoring for the
		financial company, and you can switch it off if this is required.</Paragraph>
      <List>
         <ListIntro>Generally, the factoring of accounts receivable consists fo
		  the following steps:</ListIntro>
         <ListItem>Assign a factor to an invoice.</ListItem>
         <ListItem>Send the receivables to the factor.</ListItem>
         <ListItem>Settle the factored invoice when your customer has paid the
		  invoice.</ListItem>
      </List>
      <Paragraph>For details, refer to <Link href="/baanerp/tf/onlinemanual/000428" role="manual">To process factored sales invoices</Link>.</Paragraph>
   </GeneralSection>
   <RelatedTopics>
      <SectionTitle>Related topics</SectionTitle>
      <RelTopic>
         <Link href="/baanerp/tf/onlinemanual/000420" role="manual">Factoring</Link>
      </RelTopic>
      <RelTopic>
         <Link href="/baanerp/tf/onlinemanual/000421" role="manual">To set up factoring of accounts receivable</Link>
      </RelTopic>
      <RelTopic>
         <Link href="/baanerp/tf/onlinemanual/000428" role="manual">To process factored sales invoices</Link>
      </RelTopic>
   </RelatedTopics>
</ManualTopic>