KEYTAKEAWAYS
Explore Debtors Finance, a financial practice involving the sale of accounts receivable, by referring to the comprehensive information under Factoring. Learn how this approach enhances cash flow for businesses.
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DEFINITION
Debtors Finance – Refer to Factoring for Details
Debtors finance, often known as factoring, is a financial practice that involves a business entity selling its accounts receivable, or outstanding invoices, to a third-party financial institution known as a factor. This transaction provides the business with immediate access to cash, thereby accelerating its cash flow and reducing the waiting period for invoice payment.
Factoring offers businesses a means to address short-term financial needs, manage working capital, and secure funds for operational expenses without the delays associated with waiting for customers to settle their invoices. The factor typically assumes responsibility for collecting the outstanding debts, freeing the business from the administrative burden of debt collection.
For in-depth insights into debtors finance or factoring, refer to the entry under Factoring.
