Glossary
Rating
Before offering loans, credit institutions prepare an individual creditworthiness analysis for every company; this is called a rating. It is an index that identifies the likelihood that the company will default on its obligations.
Retention
Used by the factor to reconcile rebates, early payment discounts, and possible deductions for deficiencies by debtors; it consists of 10 to 20 percent of the purchased receivables and is credited or paid out at maturity.
Risk assumption
Important service provided by factoring; unlike credit insurance companies, the factor assumes up to one hundred percent of the risk without recourse; therefore the factor bears the full risk of bad debts in case of insolvency of a customer, without requiring any special proof.
