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Hi Mr Moffat, may I know is there any other differences between forfaiting and factoring? The only difference I know is that forfaiting is having a limit of $250,000. Since both of them are very similar, I wish to know more about these two items.
Thank you 🙂
Factoring is paying someone else (the factor) to collect our debts, and the factor may offer other services as well as explained in my free lectures.
Forfeiting is selling a specific debt to a bank. They pay us immediately the amount of the invoice less a % (equivalent to charging interest) and then they collect and keep the receipts from the debt.
Any limit depends on specific countries and is of no relevant at all for the exam.
Thanks Mr Moffat.
I first saw Forfaiting yesterday from this ACCA technical articles
https://www.accaglobal.com/gb/en/student/exam-support-resources/fundamentals-exams-study-resources/f9/technical-articles/fa-receivables.htmlThat is why I was scratching my head on this. Thanks for confirming that this is irrelevant for exam 🙂
You are welcome (as long as you appreciate that it is just the limit that is irrelevant) 🙂
Sir, what about invoice discounting vs forfaiting? These two seems more similar.
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