Factoring Explained

Guide to Factoring

Factoring is the popular process whereby a business sells its invoices to a factoring company at a discount

The whole benefit of factoring is that the business gets money straight way and does not have to wait the 30-90 days business take to pay in the usual business cylcle.

Factoring differs from a bank loan in the following ways.

  1. The emphasis is on the value of the invoice not the firm’s credit worthiness
  2. Factoring is not a loan – it is the purchase of a financial asset (the receivable)
  3. A bank loan involves two parties whereas factoring involves three. The business who sells the invoice, the customer who has been invoices, and the factoring company.

Get an invoice finance quote today by calling 0800 597 4757 or apply online to compare factoring companies

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