Domestic factoring is a factoring transaction between the buyer and seller company in the same country. The seller company can guarantee its trade by transferring its post-paid receivables arising or to arise from the sale of its goods and services to the factoring company.
Process of Domestic Factoring
- Turning the invoiced receivables into cash before the due date, the seller transfers the invoiced receivables arising from its goods and services to the factoring company.
- The factoring firm makes its offer to the seller after performing the necessary examinations. In this offer, it specifies the services it will provide, the commission it will receive and the fees.
- After the factoring contract is signed between the factoring company and the vendor, the vendor sends a copy of the documents to the factoring company that assigns its receivables.
- The factoring firm makes a prepayment to the seller firm.
- When the due date of the receivable comes, the invoice amount is collected from the buyer.