What is Invoice Factoring?

Invoice Factoring is a financial transaction and a type of debtor finance in which a business sells its accounts receivable (invoices) to a third party (called a factor) at a discount. A business will sometimes factor its receivable assets to meet its present and immediate cash needs. It might also factor their invoices to mitigate credit risk. Factoring is commonly referred to as accounts receivable factoring, invoice factoring and sometimes erroneously accounts receivable financing.

Accounts receivable financing is a term more accurately used to describe a form of asset-based lending (ABL) using a company’s accounts receivable as collateral.

What is Invoice Factoring?

What is Invoice Factoring?

Invoice factoring is a financial transaction and a type of debtor finance. In an invoice factoring agreement, a business sells its accounts receivable (invoice) to…
Invoice Factoring vs. Bank Loans: What’s the Difference?

Invoice Factoring vs. Bank Loans: What’s the Difference?

Every business needs capital to start and a steady influx of cash to keep running. If you have an established client base and regular positive…
Three Common Invoice Factoring Questions Answered

Three Common Invoice Factoring Questions Answered

Invoice factoring may be a relatively new concept to some, but it’s actually been around for centuries as a financial practice. It’s used quite frequently in the transportation…

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