These invoices over accounts receivables are then sold to a third party, the debt factoring companies. You then invoice your clients for those goods and services. Initially, you provide your goods and services to your clients (as usual). Once you have decided to use debt factoring services, your company will sell its outstanding invoices, either partly or in full, to a debt factoring company. All three terms describe the same concept. The third-party, or factoring company, will then pay most or all of the invoiced amounts to the business immediately and collect payment from the business's customers.ĭebt factoring is also sometimes referred to as invoice factoring or accounts receivable factoring. This can improve cash flow and stability as a business avoids waiting times associated with invoice payments. What is Debt Factoring?ĭebt factoring, also known as invoice factoring, describes the process of a business selling their outstanding invoices to a third party at a discounted price. Keep reading for our short introductory guide. As a small business owner, it is useful to have a solid understanding of what debt factoring is, the types of debt factoring, and what the benefits and problems are. Small and medium-sized businesses are increasingly using debt factoring as a method to instantly access capital and speed up their processes.
0 kommentar(er)
