Penn State International Law Review

Article Title

Factoring in Israel


Shalom Lerner

First Paragraph

Factoring is a comprehensive, long-term relationship between a factor and an entity that sells assets or provides services to business customers ("supplier"). The factor provides the supplier with various services: financing, ledgering, collection of receivables and protection against customer default. The UNIDROIT Convention on International Factoring defines a factor as an entity that performs at least two of the following functions: financing the supplier; maintenance of the receivables; collection of receivables; and guaranty against default by customers. Due to the close legal relationship involved, many factoring agreements provide for exclusivity and prohibit the supplier from assigning its account receivables to any third party.