Factoring means than an enterprise will continuously sell its receivables resulting from the sale of goods or services to a factoring company. Thereby, the enterprise receives liquidity immediately from its accounts receivables. The factoring company checks the credit rating of the enterprise’s customers before and during the factoring relationship. It also takes on the default risk within the range of an agreed limit.

Since the 25ht of December 2008, companies that offer factoring within the scope of § 1 para. 1a no. 9 of the German Banking Act (Kreditwesengesetz – KWG) are considered as financial service institutions (Finanzdienstleistungsinstitut) which require both a license and supervision. They therefore fall under a qualified supervision by the German financial supervisory authority (BaFin), in cooperation with the German central bank (Deutsche Bundesbank).

Economic and ecological sustainability are at the core of business financing that is also viable in the future. The German factoring association (Deutscher Factoring-Verband e.V.) and its members are therefore closely monitoring and engaged with the issue of sustainability and its various effects on and consequences for factoring.