What Is Factoring Receivables?

Factoring receivables is one of the most popular ways to finance companies that are struggling with limited cash flow. Factoring uses an intermediary, a factoring company, to buy your invoices and advance you money against them.

What is factoring in accounts receivable?

Accounts receivable factoring lets companies access cash by selling invoices for cash advances. ... The factoring company follows up with the customer for payment. After receiving it, the factoring company pays the business the remainder of the invoice amount, minus fees.

What is factoring with an example?

In algebra, 'factoring' (UK: factorising) is the process of finding a number's factors. For example, in the equation 2 x 3 = 6, the numbers two and three are factors. ... “[Factoring] is selling your invoices to a factoring company. You get cash quickly, and don't have to collect the debt.”