A MATHEMATICAL MODEL FOR ASSESSING THE FACTORING ACTIVITY

Abstract

Originally–being over 4,000 years old–factoring was first used in the fertile territory of old Mesopotamia at a time when the famous Code of Hammurabi was drawn up. However, many years passed until the British colonists started to use it on a large scale at a time when the metropolis would pay them sums of money for the merchandise that colonists sent to the old continent until they collected the invoices.In Romania factoring started to play a major role in financial operations for it led to the increase of liquidities on the market.According to the Romanian legislation, factoring is a contract concluded between a party known as “the client”, which supplies merchandise or provides services, and a banking institution or specialized financial institution known as “the factor”, whereby the latter ensures the financing source, collects the receivables and protects credit risks, while the client assigns to the factor the receivables resulting from the sale of goods or the provision of services to third parties.

Keywords

• factoring
• non - recourse factor
• accounts receivable
• conventional subrogation of accounts receivable
• assignment of accounts receivable
• right of recourse
• factoring commission
• financing commission
• irrevocable letter of credit
• letter of bank guarantee