A) Fraud risk: customers obtain funds by forging or altering invoices or constructing false contracts without real trade background in order to achieve financing purposes;
B) Default risk: the buyer's enterprise pays beyond the stipulated credit period, which makes the factor unable to recover the financing money in time;
C) Bad debt risk: the accounts receivable of the seller's enterprise cannot be recovered according to the amount incurred, which is converted into the bad debt risk of the factor.
Legal risks:
A) Legitimacy of accounts receivable: that is, whether the creditor's rights are legal and valid. If the factor accepts the accounts receivable that cannot be transferred by law, it will face legal risks;
B) Risk of contract defects: If there are performance defects between the buyer and the seller, trade disputes are likely to occur. If the factor falls into such disputes, it will definitely have a negative impact on the safe recovery of factoring financing;
C) Transfer risk: the legal risk caused by the fact that the factor fails to operate in the way of "notice of transfer of accounts receivable" as stipulated by law.
Operational risk: refers to the risks that may occur in the process of business occurrence, mainly including six aspects:
A) Due diligence stage: factoring defective accounts receivable in the choice of customers and accounts receivable, and lack of investigation on the authenticity of the trade background of both parties;
B) Operation design stage: In the process of signing the factoring agreement, there are difficulties in the specific operation and subsequent implementation due to imperfect contents, incomplete terms and the agreement is not protected by law;
C) Loan management stage: for the transferred VAT invoices, business contracts, bills of lading and other documents, the handling personnel did not carefully examine the documents, resulting in false documents and real financing and other irregularities;
D) Post-loan recovery stage: after the factor provides financing to the customer, the handling personnel neglect the supervision of the seller's accounts receivable recovery, which makes the customer divert the money for other purposes, and it will be difficult for the factor to recover the financing money.