A Study on Supplier Finance Required in Maintaining Active Working Capital Level of Customers: An Example from IDLC Financing Company in Bangladesh

Abstract

Factoring is a simple form of Commercial Finance in which a Small Business which can#x2019;t qualify for more conventional financing sells its accounts receivable (invoices), representing money due from its business/governmental customers for the sale of its goods and services to a #x201C;Factor#x201D; or Factoring company at a discount from face value so that it does not have to wait the normal 30-90 days for its invoices to be paid. In short, Factoring helps a Small Business Speed Up its Cash Flow, thereby enabling it to more readily pay its current obligations and grow. Some people defined factoring as the purchasing of accounts receivable, in the form of invoices, at a discount from their face value. The term #x2018;Factor#x2019; has its origin from the Latin word #x2018;facere#x2019; meaning to make or do (to get things done). The dictionary defines a Factor as an agent, particularly a mercantile agent. Factoring has a long and fascinating history, which traces back through several centuries. In the early stages, Factors were itinerant merchants who were entrusted with merchandise belonging to others.