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Financial assets and financial liabilities

Factoring

6.1 Factoring overview

Factoring

With Without
recourse recourse

Risk and reward
Risk and reward not Risk? transferred to

transferred to the factor.
factor. Non-payment
Receivables
Receivables not Reward? derecognised, treat
derecognised, treat proceeds as a
proceeds as a loan. Payment reduction in
receivables.

Illustrations and further practice

Now try TYU question 6 from Chapter 10.

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