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Return To Factoring FAQ Archive   What is invoice factoring? Answered By Editor Invoice factoring is also known as "accounts receivable financing" or "invoice discounting." Invoice factoring is a method used by businesses (mostly small businessess) to free up capital tied up in customer invoices. Basically, the factoring company agrees to buy outstanding invoices owed to the business, usually at a discounted rate. The factoring company then owns the invoices and will attempt to collect the money owed. The business essentially sells the rights to outstanding invoices to a factoring company for a rate less than the invoices are worth. Invoice factoring can provide a win-win for both companies. It allows a business to obtain owed money quickly. The business has a positive cash flow and receives the money needed to pay its employees, bills and to expand the business. The business essentially sells the rights to outstanding invoices to another company for a rate less than the invoices are worth. The company selling the invoices gets a percentage of the amount owed on the invoice sooner than they might have otherwise been paid. Likewise, the company purchasing the invoices makes a profit when invoice is paid in full to them. It is a win-win for both companies. keywords: Factoring | Debt Factoring | Invoice Discounting | Accounts Receivable | Cash Flow | Factoring Companies | Accounts Receivable Financing General Working Capital Loan Business Venture Capital

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