Do factoring laws exist in the United States in terms of manufactured good sales?
Full Question:
Answer:
Factor is subject to different meanings. In the context of commercial transactions, a factor is a person who sells goods for a commission. A factor takes pssession of goods of another and usually sells them inhis/her own name. A factor differs from a broker in that a broker normally doesn't take possession of the goods. A factor may be a financier who lends money in return for an assignment of accounts receivable (A/R) or other security.
Most of the time factoring is used when a manufacturing company has a large A/R on the books that would represent the entire profits for the company for the year. That particular A/R might not get paid prior to year end from a client that has no money. That means the manufacturing company will have no profit for the year unless they can figure out a way to collect the A/R.
We are not aware of American factoring laws being created by statutes. The "law" is not a legislative enactment regulated and enforced by government such as tort law or criminal law. Instead it serves more as a business tool for improving a business' cash flow or aiding with accounting in other ways.
