Client, debtor and receivable risk in factoring
Factoring is the one product where the customer, the party that actually pays and the party whose signature secures the payment can be three different companies. A credit file asks its questions about one borrower; an assigned receivable asks them about the client, the debtor and, on a cheque or a bill, the drawer and every endorser on the back of it. TruvaLI screens all three in a single customer view, and screens them again with every new assignment, because the debtor portfolio changes while the client stays the same.
Risk in factoring is not one counterparty question asked once. It is three questions asked again with every assignment, and a fourth about the receivable itself. A client with clean documents can bring a debtor who is on a list, and a debtor who is clean can be named on an invoice that describes trade nobody carried out.
Why three parties instead of one
Screening only the client leaves the party that pays the money unchecked. The client is onboarded once, while its debtor list changes with every assignment, so a check taken at onboarding is already out of date by the second transaction.
| Party | What is asked |
|---|---|
| Client, the assignor | Trade registry and signature authority, the real beneficiary behind the company, sanctions and PEP screening, and whether its invoices match the sector it actually trades in |
| Debtor | Sanctions and PEP screening, whether the company exists and trades, and how much of the client's portfolio rests on this one debtor |
| Drawer and endorsers | Every name on the instrument is screened, and names that recur across supposedly unrelated clients are surfaced |
The receivable is an object of risk too
The parties can all be clean and the receivable still be the problem. What is read on the document and around it:
- The assignment chain: who held the receivable before it reached you, and how many times it changed hands.
- Whether the invoice reflects real trade, or the same amount is circulating between related companies.
- Receivables from a sector the client does not trade in, or amounts that do not fit its declared turnover.
- Altered documents. The text of the uploaded invoice is read, and the amount, date and party information in it become structured data that can be compared with what was declared.
- Companies that look unrelated but share a device, an IP or an email pattern. TruvaLI unpacks these with relationship analysis: if one company in the cluster is suspicious, the others in it are looked at as well.
What MASAK asks of a factoring company
Factoring companies are obliged parties. Identity verification, identifying the real beneficiary, sanctions and PEP screening, continuous monitoring and suspicious transaction reports are obligations, and each one has to be evidenced with a record of when it was done and by whom.
Two questions come up here more often than the rest: a debt settled long before its due date, and a debt settled by someone who is not the debtor. Both are source of funds questions, and both are written as rules so they arrive as alerts instead of being noticed by hand.
One platform, inside your own building
Screening, KYB, transaction monitoring and case management run on one rule engine with one audit trail, so a decision about a client and a decision about its debtor are not taken in two systems that cannot see each other. Rules are written in plain language and held for a person's approval before they go live. Scoring returns in under 200 ms, which is what lets a decision sit inside the assignment rather than after it.
TruvaLI runs on-premise, inside the institution's own infrastructure: customer data, keys and the audit trail stay where the regulator expects to find them.
Common questions
- Is the debtor screened as well as the client?
- Yes. The client assigns the receivable, but the debtor is the party that pays it, so both are screened against sanctions and PEP lists and both carry a risk score. On a cheque or a bill the drawer and the endorsers are screened too.
- Why is screening repeated after onboarding?
- The client is onboarded once, but its debtor portfolio changes with every assignment. A list checked at onboarding is out of date by the second transaction, so screening runs continuously and re-runs when a name enters a list later.
- How is a fictitious invoice detected?
- The text of the invoice is read and the amount, date and party information in it become structured data, which is compared with the client's declared sector and turnover and with the rest of its portfolio. The same amount circulating between related companies is what a circular invoicing rule looks for.
- Are factoring companies MASAK obliged parties?
- Yes. Identity verification, identifying the real beneficiary, sanctions and PEP screening, continuous monitoring and suspicious transaction reports are obligations, and each has to be evidenced with a record of when it was done and by whom.
- Why is an early settlement reviewed?
- A debt settled long before its due date, or settled by someone who is not the debtor, raises a question about where the money came from. Both cases are written as rules, so they are raised as alerts rather than noticed by hand.
- Can one platform cover KYB and transaction monitoring?
- Yes. Screening, KYB, monitoring and case management share one rule engine and one audit trail, so a decision about a client and a decision about its debtor are not taken in two systems that cannot see each other.