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In the context of international trade, the financial service consisting of the granting of cash in advance against accounts receivable from foreign customers. More generally, a range of financing and risk management services offered by specialized companies, called factors, to exporters/sellers, particularly those who deal with a stream of low-value, short-term foreign accounts receivable. The exporter transfers title to its foreign account receivable to a factoring house in exchange for cash at a discount from the face value. Other basic services offered by actors are: export credit risk assessment, collection of overdue foreign accounts and administration of accounting ledgers.
