| Commission: The amount paid to the factoring company to cover its collections, guarantee, and processing services.* |
| Factoring fee: The amount charged by the factoring company to cover the cost of the financing services it provides. The factoring fee is determined according to current market conditions. In the case of Turkish liras, it parallels day-to-day money markets. In export factoring, it reflects exchange rate movements.* |
| * Note : Factoring commissions and fees are liable for BSMV tax (banking and insurance transaction tax) only in the case of domestic factoring. |
| Spot transactions: These are advance payments that are made involving a fixed factoring fee charged for a set payment term. A specified percentage of the assigned receivable or of payment documents accepted for collection is made available to the seller as financing. |
| Invoice discounting: This is a variation of spot transactions. In invoice discounting, the weighted average payment term is calculated on the basis of the payment documents accepted or else of the payments that the customer will be making. The factoring fee and commission as determined using this percentage are subtracted from the total amount due and the balance is paid to the seller as an advance. |
| Variable interest transactions: These are transactions in which the factoring fee changes from day to day according to market conditions and the customer is allowed to repay the principal whenever he wants. Interest can be paid o/n, monthly, or at specified periods. |
| Export transactions: In export factoring transactions, accounts are maintained on a debtor/current basis and the factoring fee accrues monthly. |
| Export factor: The factoring company in the seller’s country that is involved in the export transaction. |
| Import factor: The factoring company in the buyer’s country that is involved in the import transaction and provides guarantees concerning the buyer. |
| Debtor / buyer: The firm that is responsible for paying the value of the invoice when due and is the buyer of the goods. |
| Receivable declaration form: This is a form that the seller fills out under his agreement with Garanti Factoring in which he itemizes the receivables that he has assigned to Garanti Factoring. (For accounting purposes, this form can be used instead of a credit note.) |
| Limit approval declaration: This is a document showing the limits (amounts and periods of time) on the guarantees that the export factor recognizes for each debtor. |
| Limit cancellation declaration: This is a document in which the export factor notifies the seller that a previously assigned guarantee limit has been cancelled. |
| Maximum factoring volume: The maximum transaction volume that Garanti Factoring will allow the seller (customer). |
| Debtor transaction volume: The maximum transaction volume allowed for each of the seller’s debtors. |
| Advance: The amount paid to the customer in advance as a specified percentage of the value of receivables assigned to Garanti Factoring. |
| Balance payment: Payment to the seller who has received an advance on an assigned invoice of the outstanding balance due to the seller at term after all expenses etc have been deducted. |
| Payment by debtor: A situation in which the debtor (buyer) is the one who makes payment when an invoice is due. |
| Cash collection: Payments that the seller makes to the factoring company to cover the factor’s expenses arising from risk exposure and the conduct of factoring. |
| Payment under guarantee: Payment of the entire invoiced amount (less factoring fee and commission) made by the import factor to the seller in the event that the buyer defaults on payment, goes into bankruptcy, etc. This payment is made on the 90th day after payment of the invoice falls due. It is not made if the reason for non-payment is in any way related to problems with the goods. |
| Notice of assignment: A note attached to invoices assigned to a factor confirming that such assignment has been made and specifying the place of payment. Notices of assignment may be included as part of a preprinted invoice and must be in the debtor’s language. |
| Approved receivable: Any receivable that is within the guarantee limit allowed by the import factor at any given time and for any particular buyer. |
| Disapproved receivable: Any receivable that is over the guarantee limit allowed by the import factor at any given time and for any particular buyer. |
| Dispute: Any fault that the buyer finds with the goods he has purchased. |
| Recourse factoring: Returning to the seller’s account the value of invoices that were assigned to the factor but cannot be collected. |
