Finance Dictionary : Factoring



Explore Factoring, a financial practice involving the sale of outstanding invoices to obtain quick cash, albeit at a potentially higher cost compared to traditional financing.



Factoring – A Financial Transaction Involving the Sale of Outstanding Invoices.


Factoring, alternately referred to as debtor’s finance or accounts receivable finance, is a financial practice wherein a factor company purchases a business’s unpaid invoices, often at a discounted rate. These outstanding invoices represent amounts owed to the business by its customers or debtors. After acquiring the invoices, the factor company assumes the responsibility for collecting the outstanding debts from the debtors.


Factoring serves as a mechanism for businesses to swiftly access cash flow, providing an immediate infusion of capital. However, this convenience often comes at a cost, as factoring can be relatively expensive compared to conventional financing methods.


This financial approach is beneficial for businesses seeking liquidity and wishing to delegate the burden of debt collection to a specialized entity. Factoring is widely used in various industries to manage working capital and maintain financial stability.


CoinRank is not a certified investment, legal, or tax advisor, nor is it a broker or dealer. All content, including opinions and analyses, is based on independent research and experiences of our team, intended for educational purposes only. It should not be considered as solicitation or recommendation for any investment decisions. We encourage you to conduct your own research prior to investing.


We strive for accuracy in our content, but occasional errors may occur. Importantly, our information should not be seen as licensed financial advice or a substitute for consultation with certified professionals. CoinRank does not endorse specific financial products or strategies.


CoinRank Exclusive brings together primary sources from various fields to provide readers with the most timely and in-depth analysis and coverage. Whether it’s blockchain, cryptocurrency, finance, or technology industries, readers can access the most exclusive and comprehensive knowledge.