The Facts About Factoring
Factoring
is often used synonymously with accounts receivable financing.
Factoring is a form of commercial finance whereby a business sells
its accounts receivable in the form of invoices at a discount.
Effectively, the business is no longer dependent on the conversion of
accounts receivable to cash from the actual payment from their
customers, which takes place on typical 30 to 90 day terms.
Businesses benefit from the acceleration of cash flow.
Factoring
is considered off balance sheet financing in that it is not a form of
debt or a form of equity. This fact makes factoring more attainable
than traditional bank and equity financing.
