Factoring
Factoring is a form of financing that isn’t a loan. Instead, factoring allows you to sell accounts receivable to an agent for a lump sum. Then, the factoring agent collects repayment from the client who owes on the account.
What is Factoring?
There’s often a waiting period between the delivery of goods and services and when a client makes payment. While you’re waiting for the invoice to be satisfied, business expenses continue to come due. Utility bills, incoming supplies, and payroll still need to be met and can’t be put off until all of your invoices have been paid.
You can utilize accounts...
What is Factoring?
There’s often a waiting period between the delivery of goods and services and when a client makes payment. While you’re waiting for the invoice to be satisfied, business expenses continue to come due. Utility bills, incoming supplies, and payroll still need to be met and can’t be put off until all of your invoices have been paid.
You can utilize accounts receivable, contracts, purchase orders, and invoices to improve cash flow by selling them to a factoring agent. The agent essentially pays off the outstanding balance, minus a factoring fee, in advance of the client. Then, the agent collects their repayment from the clients who owe on the account. In most cases, financing is decided based on a client’s ability to pay. However, if the client refuses payment or requests a return, the business must return the money to the factor.