Theme: Passive and active operations of commercial banks

Factoring operations

• Factoring allows a business to obtain immediate capital or money based on the future income attributed to a particular amount due on an account receivable or a business invoice. Accounts receivables represent money owed to the company from its customers for sales made on credit.

Forfeiting operations

Factoring: - small scale - short-term (up to 6 months) Forfeiting: - large scale - long-term (from 6 months to 5-6 years)

Lease operations (financial lease)

• Both operating leases and finance leases allow a company to rent and use an asset. However, the main difference is that under a finance lease, the lessee conveys ownership of the asset. Under an operating lease, the lessee does not get the benefits of ownership rights for accounting purposes.

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