Also called: Factoring, Disclosed factoring
Invoice factoring
Invoice factoring is a facility where a financier advances against your invoices and also takes over collection of those invoices from your customers. Customers pay the financier directly and typically know the facility exists.
What is an invoice factoring?
Invoice factoring is a facility where a financier advances against your invoices and also takes over collection of those invoices from your customers. Customers pay the financier directly and typically know the facility exists.
Example
A small manufacturer factors $120,000 of invoices; the financier advances 80% upfront and remits the balance less fees when customers pay.
Why it matters
It suits businesses without a credit control function, at the cost of the financier being visible to your customers.