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I have a question which in summary says that the factor is going to give 80% immediately and 20% will be paid to the compny one month later (currently average receivables collection period is 2.5 mths) factor charges 15% on credit sales for advancing the funds in the manner suggested??how do i calc need help….overdraft interest is 12% and bad debts doest it count as a saving if its a no recouse service??
If you look at the F9 Revision Notes on this website (linked from the main F9 page) you will find an example where the factor advances money (and a lecture that goes with it).
With regard to non-recourse factoring – yes, there is a saving because any irrecoverable debts will not longer occur.
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