Can Accounts Receivable be financed? How does it work?

Accounts receivable refers to the right to demand payment from the obligor and other rights to request payment according to the law, including existing and future monetary claims, obtained by the right holder due to the provision of certain goods, services or facilities. , but does not include the right to request payment arising from bills or other negotiable securities, and the right to request payment that is prohibited from being transferred by laws and administrative regulations.

Accounts receivable can be factored. There are the following key issues.

One ​​is to divide accounts receivable into accounts receivable with existing creditor-debt relationship and future accounts receivable.

For commercial banks, they cannot do future accounts receivable factoring business. However, factoring companies do not have this requirement. Compared with banks, this type of business is a greater business opportunity for factoring companies when there is no capital advantage.

Future accounts receivable can be divided into the debt-creditor relationship that has been booked through the contract but has not really been realized, such as the supply contract for several years signed by the supplier and the core enterprise;

There are also creditor-debt relationships that are predictable in the future according to transaction practices, such as the school’s annual tuition fees, the hospital’s medical income, and so on.

Another important point is that the assets of the notes held are not accounts receivable. Does that mean that the factoring business cannot accept the transfer of the notes?

In actual business, although bill assets are not accounts receivable assets, according to the “Negotiable Instruments Law”, the issuance and transfer of bills can be based on real debt relationships.

In the factoring business, the performance of the underlying contract is uncertain. For example, if the goods are defective, the buyer has the right not to pay.

The factoring company has greater risks at this time, but under the condition of signing the factoring contract, the debtor can issue a commercial bill to the insurance company based on the real creditor-debt relationship. business. Because of the no-cause nature of the bill, the acceptor pays unconditionally at maturity, and the factor’s risk of payment is also reduced.

Therefore, under the factoring relationship, the factor can still accept the bill, but the debtor cannot issue a bank note, because the bank requires a real trade background to issue a bank note . In addition, the commercial bills accepted by the factor cannot be discounted at the bank, which is also due to the trade background.

There are also some situations, such as which accounts receivable cannot be transferred?

The focus of factoring accounts receivable transfer is the issue of whether the creditor’s rights can be transferred. The “Contract Law” requires that as long as it is not the nature of the underlying transaction contract between the buyer and the seller, the transfer cannot be transferred. . If the basic transaction contract stipulates that it cannot be transferred, or the law stipulates that it cannot be transferred, other receivables can be transferred.

This article was originally published and first published by “Mr. Jin Yi 2022”, the WeChat public account has the same name, pay attention to it, it can be done.

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