Factoring means mercantile promotion or commercial promotion, in Portuguese. Factoring is a word known worldwide since the 17th century, but it doesn't have a clearer and more precise translation in Portuguese. It is a definition that was approved in the Diplomatic Convention of Ottawa in May 1988, where Brazil was one of the signatory nations and that was ratified by the National Monetary Council.
Factoring is part of commercial law and aims to provide services, providing resources for medium and small companies, through contracts between them, where the one that lends appears as Assignor Company, and as Assignee Company the one that requests the resources.
Factoring companies buy securities, purchase assets, such as trade bills, checks, arising from commercial sales or provision of services, charging the interest due and paying in cash to the Assignee the result of the operation. The sale of the securities that backed the operation is irrevocable and irreversible, that is, without the right to return, factoring taking on the risk in the purchase of the security.
Factoring responds to requests from companies that use them, for various reasons, mainly because of the speed at which the operation is carried out, to reduce their credit risks, to focus your sales team to carry out their work, without the worry of collecting, to increase their financial capacity and transform administrative costs that were fixed into costs variables.
