Aug 12
Factoring is the purchase of corporate accounts receivable. Generally it used when a company is in its infancy or experiences a growth spurt and gives that company access to capital through non-traditional means.
So how does factoring work? A factor purchases a business’s accounts receivable and gives them a large percentage of the total creditworthy accounts receivable up front and the remainder when they are collected. The factor handles all the credit checks, collects the accounts receivable and ledgers the receivable so the client is able to concentrate on growing their business.