: The business sells that invoice to a factoring company .
: A business provides services to a client and issues an invoice. factoring companys
The Strategic Role of Factoring Companies in Modern Commerce : The business sells that invoice to a factoring company
: The factoring company assumes the responsibility of collecting the full payment from the client. factoring is not debt
: The factor provides an upfront cash advance, usually 70% to 90% of the invoice value, often within 24 hours.
Unlike a traditional bank loan, factoring is not debt; it is the sale of an asset (accounts receivable). The process typically follows a five-step cycle: