Factoring Companies Guidebook
Direct Deliveries
Definition
Delivery of goods direct from a supplier to a customer (debtor).
See also: - "Retention of Title"
Concerns
The supplier is aware of the ultimate customer and may attempt to obtain payment direct in the event of default by the Client. The supplier's terms of sale may contain the right to do so (fiduciary/bailee ROT clauses). Additionally we may have to rely on the goodwill of the supplier to obtain Proof of Delivery. There is also the possibility that the supplier is involved in "Pre-Invoicing" or a "Bill & Hold" arrangement. The client may also be acting as Agent (see "Agency Relationships") not Principal.
Identification
Review with the Client's staff, particularly the Purchasing Manager, the purchase invoices for place of delivery and also ascertain whether these suppliers are being paid in a timely manner. Review copies of Sales and Purchase Agreements, Contracts and Terms.
Treatment
Where a right of recourse exists from the supplier direct to the customer, or where the Client is acting as an Agent, consideration should be given to reserving all the debts due from that customer, or excluding those debts from assignment to us.
