The economics of factoring accounts receivable

Interaction Between Trade Credit And Debt: Evidence From The Italian Market

“…Financial intermediaries offer lending solutions based on trade credit agreements and the value of the service offered is strictly affected by the quality of credits discounted and the relationship between supplier and customer (Sopranzetti, 1998). A further development of the paper had to consider the impact of the casual relationship in trade credit and debt choices on the asset based lending looking at the different types of contracts available.…”

In-Kind Finance: A Theory of Trade Credit

“…In our stylized model there is little difference between receivable secured lending and factoring with recourse; we refer to Mian and Smith (1992) and Ben J. Sopranzetti (1998) for further discussions of the costs and benefits of factoring.…”

The role of factoring for financing small and medium enterprises

“…In Italy, for example, 69% of all factoring is done on a nonrecourse basis (Muschella, 2003). Similarly, a study of publicly traded firms in the US found that 73% of firms factored their receivables on a non-recourse basis, but that both sellers with poorer quality receivables and sellers who, themselves, were higher quality were more likely to factor with recourse (Sopranzetti, 1998). Since in emerging markets it is often problematic to assess the default risk of the underlying accounts, typically factoring is done on a recourse basis so that the factor can collect from the seller in the case that the buyer defaults.…”