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factorship

Meanings

  • A business or financial arrangement in which one party (the factor) assumes responsibility for collecting and settling accounts receivable for another party (the merchant or client) in exchange for a fee.

    - "The clothing manufacturer enters into a factoring agreement with a financial institution. The financial institution, acting as the factor, purchases the manufacturer's accounts receivable for a fee."
    - "In exchange for a fee, the factor assumes responsibility for collecting and settling the accounts receivable of a merchant or client."
Rhymes
Words rhyming with factorship
factoring , boring , hoarding , storing
Homophones
Words having the same pronunciation but different meanings, origins, or spelling,

  1. factor

  2. actuator

  3. converter

  4. multiplier

  5. divider

  6. separator

  7. discriminator

Variants
List of all variants of factorship that leads to same result
factor , factors , factorship , factorships
Forms
Different forms of the word (e.g., verb conjugations, plural forms, comparative/superlative forms for adjectives).

factoring agreement, recourse factoring, non-recourse factoring, invoice factoring, accounts receivable factoring, asset-based factoring, receivables financing, invoice discounting, factoring lines of credit, accounts receivable lines of credit

Etymology
origin and the way in which meanings have changed throughout history.

The term 'factoring' originated from the Latin word 'facere', meaning 'to do' or 'to make'. Over time, the term evolved to refer to the process of purchasing or financing another party's accounts receivable, which involves assuming responsibility for collecting and settling those accounts.

Related Concepts
informations on related concepts or terms closely associated with the word. Discuss semantic fields or domains that the word belongs to

  1. Factoring Cycle: The Factoring Cycle refers to the sequence of events that occur during the factoring process. The cycle begins with the merchant or client selling their accounts receivable to the factor. The factor then assumes responsibility for collecting and settling those accounts receivable. Once the accounts are collected and settled, the factor pays the merchant or client the net amount due, which is the amount of the accounts receivable sold to the factor minus any fees or charges owed to the factor. The Factoring Cycle continues in this manner for each transaction between the merchant or client and the factor.

  2. Factoring Discount Rate: The Factoring Discount Rate refers to the percentage fee charged by the factor to the merchant or client for purchasing their accounts receivable. The discount rate is expressed as a percentage of the total amount of the accounts receivable sold to the factor. For example, if the total amount of the accounts receivable sold to the factor is $10,000, and the factor charges a discount rate of 2%, then the factor would pay the merchant or client $9,800 ($10,000 minus $200, which is 2% of $10,000).

  3. Factoring Fee Structure: The Factoring Fee Structure refers to the different fees and charges that a factor may impose on a merchant or client for providing factoring services. The fee structure may include one or more of the following fees: (1) Discount Rate: This is the percentage fee charged by the factor to the merchant or client for purchasing their accounts receivable. (2) Transaction Fee: This is a fixed fee charged by the factor for each individual transaction processed through the factoring agreement. (3) Monthly Minimum Fee: This is a minimum fee charged by the factor to the merchant or client each month, regardless of the volume of transactions processed during that month. (4) Interest Charges: In some cases, a factor may provide financing to a merchant or client in addition to factoring services. If the factor provides financing, it may charge interest on the amount financed. (5) Late Payment Fees: If a merchant or client fails to pay the factor on time, the factor may charge a late payment fee. (6) Early Termination Fees: If a merchant or client terminates the factoring agreement before its scheduled expiration date, the factor may charge an early termination fee.

  4. Factoring Line of Credit: A Factoring Line of Credit refers to a revolving line of credit extended by a factor to a merchant or client. The line of credit allows the merchant or client to borrow funds against their accounts receivable, up to a predetermined credit limit. The line of credit can be used to finance a variety of business expenses, including payroll, inventory purchases, and other operating expenses. The factor may charge a variety of fees and interest rates for providing the line of credit, depending on the specific terms and conditions of the agreement.

Culture
Any cultural, historical, or symbolic significance of the word. Explore how the word has been used in literature, art, music, or other forms of expression.

Factoring has been used extensively in various industries and businesses throughout history. In literature, factoring has been depicted as an essential tool for merchants and traders in ancient times. For instance, in the novel 'The Alchemist' by Paulo Coelho, the protagonist, Santiago, uses factoring to finance his journey to Egypt in search of his personal legend.

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