Factoring is the sale of accounts receivable at a discount. It’s often used interchangeably with several other terms including invoice factoring, receivables factoring, invoice financing, or receivables financing. All the terms effectively mean the same thing – the sale of a company’s receivables to provide short term working capital funding.
To qualify for factoring, a company’s customers typically need to be another business or the government. It’s used in many industries including transportation, staffing, distribution, consumer and enterprise products, and business services, to name just a few. Companies in all stages of growth, from startup to Fortune 500, use factoring to improve cash flow.
For a detailed explanation of factoring check out our Invoice Factoring 101 guide.