Receivable factoring is a finance solution that allows business owners to quickly turn invoices into working capital. In spite of waiting for weeks for customers for paying their invoices, receivable factoring lets business owners to get an advance for those invoices and use the cash to fulfil the business needs instead of waiting for customers to pay. It’s more considered for the businesses that have long net terms but along with that have ongoing operational expenses.

Receivable factoring makes it possible to finance an existing business for the needs. Getting a debt helps business in generating capital for the maintenance and growth. Factoring receivables is a kind of financial transaction and debtor finance in which a business sells its accounts receivable or invoices to a third party/factor at some discount. A business performs receivable factoring of its assets to meet and overcome its present and immediate cash needs. Factoring is commonly known by accounts receivable factoring, invoice factoring and sometimes erroneously accounts receivable financing. Receivable financing is a term that is more accurately used for describing a form of asset-based lending using a company’s accounts receivable or invoices as collateral.

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