Factoring-Introduction Credit Factoring is an asset backed means of financing (tripartite agreement between the buyer, seller and the factor), whereby the account receivables are assigned to a third party called factor for a discount, releasing the tied-up capital and providing financial liberty to the Company. The origin of factoring goes back to 14th century in England. Earlier, factoring was confined to textile and garment industries, but later was spread across various industries and markets. Factoring has been defined as: “ a continuing legal relationship between a financial institution (the “factor”) and a business concern (the “client”) selling goods or providing services to trade customers (the “customers”) whereby the factor purchases the client’s book debts either without or with recourse to the client, and in relation thereto controls the credit extended to customers and administers the sales ledger.”