undisclosed factoring

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A form of factoring in which the seller of goods does not wish to disclose that a factor is being used. In these circumstances, the factor buys the goods that have been sold (rather than the debt their sale incurred) and, as an undisclosed principal, appoints the original seller to act as an agent to recover the debt. The factor assumes responsibility in the case of non-payment so that from the point of view of the seller, the factor offers the same service as in normal factoring.

Subjects: Financial Institutions and Services.

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