Types of Debtor Finance
Debtor finance products, by whatever name, essentially fall into two categories:
- Confidential: the customer/end-user is unaware of the funding being provided, usually called 'invoice discounting',
- Disclosed: traditionally referred to as 'factoring', where invoices have a notice that warns the customer to pay the funds to the financier in settlement of the debt.
Export factoring is a highly specialised and selective form of factoring, and can provide non-recourse funding to exporters, paid at the time of shipment, and with solvency of the overseas importer underwritten by an overseas bank or institution.
Under each category there are a number of financiers, all with varying policies and guidelines regarding their procedures, security, pricing and target markets. There are providers of import and export factoring, and their conditions vary widely.
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