What Is Factoring and the Types of Factoring?

In general, factoring means a company is turning over their invoices to a third party in return for receiving a portion of those invoices in cash within a few business days. Primarily, there are two types of factoring, recourse factoring and non-recourse factoring.

What is factoring explain?

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 are the three types of factoring?

This section will review three of the most common types of factoring - factoring out a Greatest Common Factor, Trinomial Factoring and factoring a Difference of Squares.