What Is Factoring?
If you’d like to learn more about accounts receivable factoring, you have come to the right place! Factoring University provides educational information about non-recourse factoring.
Are you wondering what factoring is? Could it be right for your company? Watch this video for a brief introduction to this service.
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Definition of Factoring:
Factoring is an agreement between a factor and a supplier in which the factor purchases the supplier’s accounts receivable and, in non-recourse arrangements, assumes responsibility for the supplier’s customers’ financial inability to pay. (The customer is typically a retailer, but it could be a wholesaler or a manufacturer as well.) If a customer is financially unable to pay, the factor makes payment on undisputed, approved invoices. The factor extends credit to the customers, collects the accounts receivable from customers and performs the related bookkeeping functions. As needed, the factor may also provide cash advances against open receivables prior to collection.