Factoring
/ Account Receivable Financing: What is it?
Factoring,
also known as Account Receivable Financing, refers to when a business
sells one or more of its accounts receivable in return for immediate
cash, minus a small discount.
Factoring
is used by companies across a broad range of industries. It is
a form of asset based lending companies use as an alternative
to conventional loans and lines of credit because it allows immediate
access to affordable funding without the long application and
underwriting process.
Other types
of asset based lending are commonly, yet incorrectly, referred
to as factoring. These include purchase order financing, inventory
financing, and a few others.. |
