The Role of "Reverse Factoring" in Supplier Financing of Small and Medium Sized Enterprises

Topics:
Commercial Banking,
Investment and Capital Markets
Tags:
Emerging Market,
Supplier,
Small And Medium Enterprise,
Receivables,
Operational Accounting,
Free Trade,
Financial Services,
Finance,
Factoring,
World Bank Group
Source:
World Bank Group

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Overview: The global pattern of factoring suggests that it may have an advantage compared to other types of lending, such as loans collateralized by fixed assets, under certain conditions. However, ordinary factoring has in general not been profitable in emerging markets. This paper focuses on an alternative usually used in emerging markets, which is for the factor to buy receivables "with recourse", which means that the seller is accountable in the case that a buyer does not pay its invoice, and that the seller of the receivables retains the credit risk.

(Is this item miscategorized? Does it need more tags? Let us know.)

Format: PDF | Size: 205KB | Date: Sep 2004 | Pages: 32

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