Factoring, Leasing and Confirming for Entrepreneurs

Abstract

The sources of financing selected to support and develop a business are a key element during the different stages of a company’s life. In this sense, in a com pany’s financial planning process, it is essential to determine its financing needs to achieve the company’s general objectives and, specifically, its financial objectives. In this chapter, factoring and leasing are studied as financial tools for a company’s cash management and as widely used sources of financing. Factoring is a combina tion of different services, ranging from risk hedging through collection and recov ery management to invoice portfolio control. Leasing is characterized by the fact that a party (the lessor) assigns the use and enjoyment of an asset through the pay ment of periodic installments that include the cost of the assignment plus interest and expenses. Some of their main advantages and disadvantages are presented, as well as the different types of factoring and leasing that can be found. Finally, a spe cific section is included on confirming as a supplier payment management system that allows the collection of invoices before the agreed due date (maturity date)