Why Invoice Factoring?
- Invoice Factoring is a line of credit against your outstanding invoices. It is effectively a non-collateralised overdraft facility (no bricks and mortar).
- Factoring is when a business sells its receivables debts (invoices) to a factor (financier).
- With full service Factoring there is no option for a confidential facility and all information is usually disclosed. This helps greatly in the collection process.
- The financier does the debt collecting. This frees up your A/R staff and is provided free of charge.
- One other difference between Invoice Factoring and Invoice Discounting is that Invoice Factoring is the sale of receivables as opposed to Invoice Discounting, which is borrowing where the receivable is used as security.