Debt purchase (fordringskøb)
Also known as sale of receivables, portfolio sale, factoring, non-recourse, fordringskøb, salg af fordringer, porteføljesalg
Debt purchase is the sale of a claim or a portfolio to a third party — the creditor gets the money now in return for giving up the full amount.
In practice
Debt purchase converts an uncertain future amount into a certain amount now. The buyer pays a percentage of face value and takes on the risk.
The price depends on how good the claims are: documentation, age, type of debtor, and whether there is a judgment. A portfolio of fresh, undisputed B2B claims with documentation is worth something. A portfolio of two-year-old consumer claims with no paperwork rarely is.
Non-recourse means that the buyer bears the loss if the claim cannot be collected — the expensive, but clean, variant.
Where it commonly goes wrong
- Selling too early. The first 40 days are the days when the claim is worth the most — including to you.