2 min read
Definition
Factoring is a type of invoice finance in which a business sells its trade debts to a factor for an advance of most of their value, with the factor then responsible for collecting payment from customers.
In plain terms
You get most of the invoice value straight away instead of waiting, and hand the collection work to the provider — useful if chasing payments drains you.
Why it matters for your company
Factoring turns slow debtor days into immediate cash, easing working capital. Weigh the cost against the benefit. See invoice finance.
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