Factoring receivables is a type of financing where businesses convert unpaid invoices into immediate cash by selling them to a factoring company. Also known as accounts receivable factoring, it helps businesses improve cash flow without waiting for customers to pay. In most cases, you receive a large portion of the invoice amount—often within 24 hours—directly to your bank account. That means you can keep your business moving without delays.
Here’s how it works: you deliver a product or service, issue an invoice to your customer, and then transfer that invoice to a factoring company. They advance you a percentage of the invoice and collect the payment from your customer later. There are different types of factoring available, including recourse, non-recourse, and spot factoring, depending on how much risk you’re willing to transfer and how much control you want to keep over client communication.
Factoring is widely used by small businesses, startups, and growing companies across industries like logistics, healthcare, manufacturing, and construction—especially when dealing with long payment terms.
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