Q. Factoring is the financial service under which the 'factor' renders various services which includes : 
(a) Discounting of bills (with or without recourse ) and collection of the client's debt . Under this, the receivables on account of sale of goods or services are sold to the factor at a certain discount . The factor becomes  responsible for all credit control and debt collection from the buyer and provides protection against any bad debt losses to the firm . There are two methods of factoring --- recourse and non - recourse . Under   recourse factoring, the client is not protected against the risk of bad debts . On the other hand , the factor assumes the entire credit risk under non- recourse factoring i.e., full amount of invoice is paid to the client in the event of the debt becomes bad.