What is the difference between accounts receivable collection in commercial factoring and traditional debt collection business?

1, the nature of the different

Traditional debt collection business is essentially a bad debt collection service, is a kind of agency services. The seller company's trade accounts have been generated for six months or a year, but they do not have the energy to collect the accounts, so they commissioned a third-party agency to collect the accounts. The factor will first investigate and evaluate the buyer (i.e., the customer), and on this basis propose a credit limit within which the buyer company can revolve the funds.

2. Different attribution of claims

Traditional debt collection business claims are still owned by the seller company, and no transfer has occurred. The commercial factoring accounts receivable collection business factoring company to pay the funds at the same time the accounts receivable claims to the factor's name. Claims have been transferred.

3, business substance is different

Factoring manifestation is reflected in the factor to provide the factoring services, the core for the acquisition of claims through the way to provide financing, the substance of the connotation for the provision of integrated services. In real life, some creditors in the repeated failure to recover the debt, will entrust the debt collection company to collect the debt, the essence of the connotation is in order to minimize the economic loss of efforts.

Source: Baidu Encyclopedia - Debt Collection

Source: Baidu Encyclopedia - Commercial Factoring