Key functions of controlling

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Forfaiting concerns long-term transactions, lasting up to several years. Factoring applies to short-term receivables   usually up to months  . A forfaiting agreement may cover only one transaction. In factoring, it is possible to conclude a single contract for several different receivables. The importer   purchaser of goods or services   is responsible for paying forfeiting costs. In turn, in factoring, this is the responsibility of the factoring party, i.e. the seller.

The forfaiting service involves concluding a letter of credit, issuing bills of exchange, and guaranteeing, which philippines photo editor may further complicate the process. In factoring, it is simplified - receivables are settled based on invoices. Forfaiting is limited only to the purchase of receivables. Factoring companies quite often offer additional debt collection services or credit scoring. Financing under forfaiting is % of the transaction value, while in factoring - between % and %. Factoring and forfaiting – similarities However, it is worth mentioning certain aspects that are the same for both forms of financing.



Factoring and forfaiting involve the sale and transfer of financial assets   receivables or invoices  ; They are used to improve the financial liquidity or creditworthiness of an enterprise, obtain additional capital; Both transactions require the presentation of appropriate documentation proving the condition of the company and, therefore, due diligence ; They are used to reduce financial risk. Factoring and forfeiting services are provided by companies specializing in this field. Summary Forfaiting is one of the possibilities of managing company finances and maintaining cash flow at the correct level.