A type of factoring in which a factor collects the payments falling due directly from the debtors (customers owing the seller of receivables). The factor takes care of everything related to bookkeeping and recording of payments over time, and is also responsible to cover all losses arising from bad debts– i.e., the portion of uncollectible debts- and without recourse to the seller (in which case it is known as non-recourse factoring). The distinct feature of this type of factoring is that the factor collects dues and only passes on the agreed-on seller’s share of the monthly proceeds after the maturity date of each month’s sales invoices raised by the seller.

The factor is contractually bound to pay the seller after each maturity date irrespective of collectibility- that is, whether the factor gets paid by the customers/ debtors or not. The factor bears the credit risk associated with the underlying debt (however, this risk would already be factored in the price calculation at the time of the factoring contract.)

However, maturity factoring could also be with recourse (recourse factoring) where the factor has recourse to the seller should bad debts arise due to non-payment or default by the clients.

It is also called a maturity factoring.