Factoring, by definition, is the business of purchasing and collecting accounts receivable or of advancing cash based on accounts receivable – for less than their total billing amount – for cash on hand immediately. When any type of business sells a product or service to a customer (the debtor), that business provides an invoice stating what services or products have been sold and the amount the customer (the debtor) has agreed to pay. An invoice is a document acknowledging a debt from the customer (the debtor) to the business. Rarely are these invoices paid promptly. Typically these invoices are paid over a period of 15, 30, 60, 90 days, or even longer. Quite often, more prominent customers (the debtor) take longer to pay. An unpaid receivable or invoice has value. Factors are investors who can be an individual or business that pay cash now for the right to receive future payments on a client’s invoices to their customers (the debtor).
Here’s a special message for every business owner who requires funding to help with cash flow, but cannot get it from a bank or doesn’t want to use a bank.
