Accounts Receivable Funding (Factoring) Explained
- Topics:
- Working Capital
- Source:
- Factor Funding Co.
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Overview: Article defines factoring process which is one part of working capital. In other terms, Accounts Receivable Funding also known as factoring is the sale of invoices at a discount. A method of financing that is used by businesses to raise capital quickly and improve cash flow without going into debt. It explains the working of the factoring process and states that when a business sells a product or service to a customer, it creates an invoice. Typically, an invoice would itemize the unit sold, the price, and the terms of the sale. The invoice can either serve as a receipt if it acknowledges that payment has been received, or as a bill if payment is due. An outstanding invoice may also be called an account receivable. Instead of waiting to collect payment, a business may elect to sell the invoice to a factor and receive immediate cash advance. A factor is an individual or business that is engaged in the buying of accounts receivable.
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Format: HTML | Date: Jan 2003 | Pages: 1
