Elements of the factoring contract

Abstract

Factoring is a type of contract used by companies, mainly SMEs, as a financing instrument. Factoring allows companies to receive their client’s payment in advance, with financing provided by a factoring company (“factor”). Factoring can also provide the guarantee of collection of all or part of such credits by the factor, or both, at the same time. There are many advantages that this type of contract can provide to entrepreneurs, hence its growing expansion. This work analyzes the elements of this atypical contract.