FACTORAGE Meaning and
Definition
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Factorage is a term used in commercial and business contexts, referring to the commission or fee charged by a factor for various services rendered. A factor is an intermediary or middleman that provides financial services to businesses, mainly in relation to the management of accounts receivable. Factorage can encompass multiple activities performed by a factor, such as the purchase of accounts receivable, collection of debts, credit evaluation of customers, and providing financing solutions.
Factorage fees are generally calculated as a percentage of the total value of the accounts receivable or invoice amount being managed by the factor. These fees compensate the factor for assuming the risk of non-payment by customers and for providing working capital to the business. The factor may also deduct additional charges for expenses incurred in the collection process, such as legal fees or sales agent commissions.
Factorage is commonly utilized by small and medium-sized enterprises (SMEs) facing cash flow challenges or seeking to outsource credit management activities. By engaging a factor and paying factorage fees, businesses can access immediate cash flow and transfer the risks associated with customer payments to the factor. Additionally, the factor's expertise in credit evaluation and collection can help optimize the efficiency and effectiveness of the business's account receivable management, allowing companies to focus on core operations and growth.
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The allowance or commission given to a factor.
Etymological and pronouncing dictionary of the English language. By Stormonth, James, Phelp, P. H. Published 1874.
Common Misspellings for FACTORAGE
- dactorage
- cactorage
- vactorage
- gactorage
- tactorage
- ractorage
- fzctorage
- fsctorage
- fwctorage
- fqctorage
- faxtorage
- favtorage
- faftorage
- fadtorage
- facrorage
- facforage
- facgorage
- facyorage
- fac6orage
Etymology of FACTORAGE
The word "factorage" has its roots in the Latin language. It is derived from the Latin word "factor", which means "one who does or achieves something" or "a person who acts on behalf of another". In medieval Latin, "factorem" became "factore", which referred to a commission agent or a factor who acted on behalf of merchants in handling their business affairs.
Over time, "factorage" emerged as a noun form of "factor", specifically referring to the fee or commission charged by a factor or an agent for their services. Today, the term is commonly used in the context of commercial transactions and the business of commission agents or factors.
Similar spelling words for FACTORAGE
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