Open Factoring and related risks

Open Factoring in Switzerland Open Factoring in Germany
Description of the product
  • This is an invoice sale (factoring contract). As an investor, you buy the invoice from the seller.
  • The debtor is informed on the invoice about the cession of the invoice to Advanon and has to make the payment directly to an Advanon bank account
  • Advanon can take recourse against the seller in case of debtor delay or default
  • This is an invoice sale (factoring contract). As an investor, you buy the invoice from the seller
  • The debtor is informed on the invoice about the cession of the invoice to Advanon and has to make the payment directly to an Advanon bank account
  • Advanon can take recourse against the seller in case of debtor delay or default
Legal claims
  • Against the debtor on basis of the invoice payable
  • Right of recourse against the seller
  • Against the debtor on basis of the invoice payable
  • Right of recourse against the seller
Credit Risks
  • Debtor default: debtor cannot pay the invoice

→ Recourse against the seller- Once debtor defaults, credit risk shifts to the seller

  • Debtor default: debtor cannot pay the invoice

→ Recourse against the seller- Once debtor defaults, credit risk shifts to the seller

Fraud Risk
  • Forging of invoice: low risk as we can contact debtor to verify the invoice
  • The seller can contact the debtor after our verification and change the payment account.
  • Forging of financial statements

→ These are not audited statements, we have a risk-adjusted approach to verify them but cannot entirely eliminate this risk

  • Forging of invoice low risk as we can contact debtor to verify the invoice
  • The seller can contact the debtor after our verification and change the payment account.
  • Forging of financial statements

→ These are not audited statements, we have a risk-adjusted approach to verify them but cannot entirely eliminate this risk

Operational Risk
  • Debtor (especially large ones) fail to adjust the payment account and pay to the seller instead of us.
  • If the invoice is already sent out before financing the debtor cannot be legally forced to change the payment account

→ This can transfer the risk to the seller default

  • Debtor (especially large ones) fail to adjust the payment account and pay to the seller instead of us
  • If the invoice is already sent out before financing the debtor cannot be legally forced to change the payment account

→ This can transfer the risk to the seller default

This post is also available in: Deutsch (German)

Updated on June 13, 2018

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