The factoring company purchases receivables with the proviso that if the debtor defaults on payment, the contract will be rescinded; in other words, the factoring client – the original creditor – will take the defaulted payment claim back onto its books. This prevents a creditor from forwarding bad debts to the factoring company. – See Adverse selection, Factoring, genuine, Factoring, silent, Maturity factoring, Security retention.
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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
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