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What is factoring a business?

Factoring is a financial transaction and a type of debtor finance in which a business sells its accounts receivable (i.e., 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.

What is factoring and how does it work?

Factoring is a financial method that allows businesses to access funds for growth, expansion, or fulfillment of their supply requirements. It involves a finance provider purchasing or assuming the debt or unpaid invoice of the business or vendor. The factor will then pay the invoice amount directly to themselves, typically at a reduced rate.

What is a factor in finance?

A factor in finance is the factoring business that buys other companies’ invoices, often at a discounted price. This third party purchases the accounts receivable and provides cash or financing. Factors are essential intermediaries between businesses and their customers.

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