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 ?
``The temperature was around about freezing with a very strong windchill factor, and the ground was covered with soft snow over ice.
He says: "Quite a few years ago I experienced minus 47 degrees (including the windchill factor) in the Canadian High Arctic, but I recollect no discomfort.
Cardiff Met Office said temperatures in Snowdonia had plummeted to around -3C (26F) when the windchill factor was taken into account.
Winds of up to 122mph were driving blizzards across the Cairngorms and causing a windchill factor of minus 25C.
But it will feel closer to freezing for most because of the windchill factor, as cold air from the Arctic sweeps in.
Louis Cardinals renewed their ancient rivalry Tuesday night, when the gametime temperature was 35 degrees with a northeast wind at 10 mph, making for a windchill factor of 29.
The brutal windchill factor sank Comertown, Montana, to -52C.