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Is factoring and Invoice Discounting allowed in Islam?

Answered according to Hanafi Fiqh by Askimam.org

Is factoring and Invoice Discounting allowed in Islam if no then what is the solution and if yes then can you please recommend institutions which are doing it the proper way.

Answer

In the Name of Allah, the Most Gracious, the Most Merciful.

As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.

Factoring is a financial transaction whereby a business sells its accounts receivable (i.e. invoices) for cash to a third party (called a factor) at a discount.1

Invoice discounting is also a form of factoring.2 

Factoring and invoice discounting both are not permissible.3

You may be present your personal situation to the Darul Iftaa. We will advise on the alternative.

And Allah Ta’āla Knows Best

Huzaifah Deedat

Student Darul Iftaa
Lusaka, Zambia

Checked and Approved by,
Mufti Ebrahim Desai.

www.daruliftaa.net

_________________________

1chttps://en.wikipedia.org/wiki/Invoice_discounting

2 https://en.wikipedia.org/wiki/Factoring_(finance)

النتف في الفتاوى للسغدي (1/ 475)3

 بيع الدّين بِالدّينِ وَهُوَ ان يكون لرجل دين من ثمن مَتَاع بَاعه مِنْهُ اَوْ قرض من حِنْطَة اَوْ شعير اَوْ شَيْء من الْوَزْن فيبيعه من رجل اخر اَوْ من ذَلِك الرجل نسيئا فَأن ذَلِك لَا يجوز

المبسوط للسرخسي (12/ 70)

 بيع الدين من غير من عليه الدين لا يجوز؛ لأنه عقد مشروع لتمليك المال،

مقروض کے علاوہ کسئ اور پر قرض فروخت کرنا فقہاء نے ممنوع قرار دیا ھے

فتاوی حقانیّہ جلد 6 ص 91

کبھئ ایسا ھوتاھے کہ ایک شخص کئ ایک رقم کسئ کے یھاں باقی ھوتی ہے مثلا پانچ سوروءپے زید کے عمر کے یہاں باقے ہےزید کسی اور شخص سے پانچ سوہئ مہں یا کچھ کم میں فروخت کردیتا ہےی صورتیں نا جیز ھے

جدید فقھی مسایل جلد اول ص 283


This answer was collected from Askimam.org, which is operated under the supervision of Mufti Ebrahim Desai from South Africa.

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