factor

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Factor

A financial institution that buys a firm's accounts receivable and collects the accounts.

Factor

A third party that buys a firm's accounts receivable. If a firm is not confident in its ability to collect on its credit sales, it may sell the right to receive payment to the factor at a discount. The factor then assumes the credit risk associated with the accounts receivable. This provides the firm immediate access to working capital, which is important, especially if the firm has a cash flow problem. The price of factoring is determined by the creditworthiness of the firm's customer, not of the firm itself. It is also known as accounts receivable financing.

factor

A firm that purchases accounts receivable from another firm at a discount. The purchasing firm then attempts to collect the receivables.

factor

To sell accounts receivable to another party at a discount from face value. Thus, a firm in need of cash to pay down short-term debt may decide to factor its accounts receivable to another firm.

factor

  1. a firm that purchases TRADE DEBTS from client firms. See FACTORING.
  2. a firm that buys in bulk and performs a WHOLESALING function.
  3. an input (for example raw material, labour, capital) which is used to produce a good or provide a service.

factor

  1. 1a FACTOR INPUT that is used in production (see NATURAL RESOURCES, LABOUR, CAPITAL).
  2. a business that buys in bulk and performs a WHOLESALING function.
  3. a business that buys trade debts from client firms (at some agreed price below the nominal value of the debts) and then arranges to recover them for itself. See FACTOR MARKET, FACTORING.
References in periodicals archive ?
Over longer periods of time, the real share of intermediate inputs can change enough that the growth factors of primary inputs and all inputs can begin to diverge significantly so that the general rule of the magnification factor being approximately equal to the cost share of primary inputs in the base year is less useful.
Since construction had the lowest magnification factor over the 2000-2012 period (0.24), reflecting its low intermediate input share, the absolute value of its TFP growth rate relative to that of any other industry with positive TFP growth will always be lower under a gross output framework.
(19) Similar to the Laspeyres magnification factor, this can be split into the time 1 share of primary input, (1 - [S.sup.1.sub.M]), and a ratio of the growth factor of gross output to that of real value added.
where the weight given to the Laspeyres magnification factor is defined using the Paasche and Laspeyres gross output-based TFP growth rates as w [equivalent to] [[pi].sub.G]/[[pi].sub.G] + [[pi].sup.*.sub.G].
We will refer to this as the "complex" approximation of the Fisher magnification factor. Under the assumption that the Paasche and Laspeyres growth rates are very similar, Diewert (2015) offers a simpler approximation where w = 1/2 .
In most industries, the choice of a Laspeyres, Paasche, or Fisher index for aggregation has very little impact on the estimated magnification factor (Appendix Table 3).
(5) In a Paasche index framework, the magnification factor is the share of primary inputs multiplied by the ratio of the growth factor of gross output growth to the growth factor of real value added growth.
(6) For consistency with the terminology used in Diewert (2015), we will refer to the term as a magnification factor even though it scales down the value added-based TFP estimates in this article.
(10) Since the share of primary inputs in total input costs is equal to the ratio of primary input costs to total input costs at time 0 and the second term is the ratio of the growth factors of primary inputs and total inputs, the magnification factor can also be interpreted as simply the real cost share of primary inputs in total input costs at time 1 (i.e.
so that the Paasche magnification factor can also be interpreted as simply the ratio of real value added to real gross output at time 0.
(6) For ease of interpretation, the magnification factors which we calculate are the reciprocal of those presented by Diewert.
We apply approximations of the Laspeyres, Paasche, and Fisher magnification factors to Australian data at the industry level taken from the Australian Bureau of Statistics (ABS) Estimates of Industry Multifactor Productivity.