Cost Associated with In house Management
(i) cash discount, (ii) cost of funds invested in receivables, (iii) bad debts, (iv) lost contribution on foregone sales and (v) avoidable cost, of sales ledger administration and credit monitoring.
(i) factoring commission, (ii) discount charge and (iii) cost of long term funds invested in receivables.
Benefits Associated with Recourse Factoring
They are in terms of the costs associated with the in house management alternative with the exception of term, namely, bad debt loss.
Benefit Associated with Non Recourse Factoring
The above plus the bad debt losses relevant to in house management of receivables.