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Facoring Halal or Haraam

Last updated: 14th July 2013
Question ID: #4246
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Abdur Rahman
14th July 2013

Factoring Halal or Haraam?

Ulamaa ID 12
Answer last updated on:
14th July 2013
Answered by:
Ulamaa ID 12
Location: United Kingdom
Bismillahir Rahmaanir Raheem

Al Jawaab Billahit-Tawfeeq

Respected brother,

Factoring is Haraam.

It is clear usury.

"Factoring is a financial transaction whereby a business sells its accounts

receivable (i.e., invoices) to a third party (called a factor) at a discount in

exchange for immediate money with which to finance continued business."

This is such a classic example of usury. The invoices are in fact debts. Selling

debts is clearly haram in itself. And discounting the debt is another step in


And Allah knows best