What is Factor?

A factor is an intermediary that offers companies immediate cash or financing by buying their accounts receivables. Essentially, a factor is a financial entity that agrees to provide the company with the value of an invoice, deducting a certain amount for commission and fees. Through this method, businesses can enhance their short-term liquidity by trading their receivables for a quick cash infusion from the factoring firm. This approach is also referred to as factoring, factoring finance, or accounts receivable financing.