Invoice factoring is a financial transaction whereby a business sells its accounts receivable to a factoring company at a discount in order to meet immediate cash needs such as securing working capital to meet expenses, covering payroll or expanding their sales. The advantage of invoice factoring is that it enables you to turn current unpaid invoices into accessible cash. “Invoice financing”, “accounts receivable financing” and “receivables financing” are all interchangeable terms used for factoring.
The generous terms requested by your clients mean that invoices can be outstanding for 30, 60, or 90 days before you receive payment. This delay in receiving payment results in you either missing out on opportunities to expand your business or falling behind on important expenses such as payroll. Fortunately much of this frustration can be reduced or eliminated with factoring.