Of all the financial facilities and services that have appeared in the UK in the past ten years or so, probably the least understood is factoring. Pure debt factoring does not attract any supply of finance but is a service. The service is that of keeping the client company's sales ledgers, collecting remittances, providing credit control (deciding the level of credit the client's customers should receive) and guaranteeing payment of debtors' balances if kept within the limit suggested by the factor. It can be seen, therefore, that by using the services of a factoring company it is transferring, for a fee, the responsibility for the control of the investment in trade debtors.
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