What is factoring?
Answer:
Factoring is when a company sells it's accounts receivable to another company who then collects from the original customer.
You own a company that sells products on credit terms to your customers. You deliver the goods and they have 30 days to make full payment. You want a faster cashflow, so you take the receivables, say $10,000 worth and sell them to the factor. The factor pays you $9,500 and then collects the original $10,000 from your customer. You get less money, but receive it immediately. The factor makes the difference in the discount, but has to collect the money from the customer.
Dale explained it beautifully!
The answers post by the user, for information only, BAnswer.com does not guarantee the right.
Other Questions and Answers: