WHAT IS ACCOUNT RECEIVABLE FACTORING?

Accounts Receivable Factoring is sometimes called “Invoice Factoring.” It refers to when a business sells unpaid invoices to an accounts receivable factoring company or a “Factor” for a discounted rate. It is now the job of the factoring company to collect the payment from your customer. Once the factoring company collects from the client, they pay the small business owner the remainder of the invoice amount, minus factoring fees.

Invoice factoring loans are a solution for small business owners who experience a long lapse between when a service is rendered and when the invoice is paid. This type of financial transaction allows the business owner to receive payment on their accounts receivables sooner than they usually would have.