are a fairly low-risk asset due to their short duration. External fraud by clients: fake invoicing, misdirected payments, pre-invoicing, not assigned credit notes, etc. A fraud insurance policy and subjecting the client to audit could limit the risks. Legal, compliance and tax risks: large number of applicable laws and regulations in different countries Operational risks, such as contractual disputes Uniform Commercial Code (UCC-1) securing rights to assets. IRS liens associated with payroll taxes, etc. ICT risks: complicated, integrated factoring system, extensive data exchange with client Reverse factoring In reverse factoring or supply-chain finance, the buyer sells its debt to the factor. That way, the buyer secures the financing of the invoice, and the supplier gets a better interest rate. See also Capital formation Invoice discounting References Corporate finance Fundamental analysis Accounting terminology Working capital management Accounts receivable