What is Factoring Finance?

Category: Finance

1Definition

Selling accounts receivable to a third party at a discount for immediate cash.

2Context

Improves cash flow but reduces profit margin. Common for businesses with slow-paying customers.

3Example

A company factors $100K in receivables, getting $95K immediately instead of waiting 60 days.

⚠Common Trap

Factoring is expensive compared to traditional loans—use only when necessary.

More Finance Terms

Get clear definitions without the jargon