Accounts receivable factoring

The object of this article is to provide non-biased accounts receivable factoring information. Accounts receivable factoring allows a business to increase the amount of cash available to it without the need for a bank loan.



There are certain differences between accounts receivable factoring and a bank loan. Firstly there are three parties involved in accounts receivable factoring instead of two. There is the business which provides the goods or services (“the business"), the customer or debtor which receives the goods or services (“the debtor") and the accounts receivable factoring company, which purchases the accounts receivable from the business (“the factor"). Another difference between accounts receivable factoring and a bank loan is that accounts receivables factoring companies are not overly concerned about the credit worthiness of the business. It is more concerned with the credit worthiness of the debtors. Accounts receivable factoring companies also offer very different services to a bank which can include chasing up late payments and providing reports to the business as to when payments have been made by debtors. The main difference between accounts receivables factoring and a bank loan however is that accounts receivable factoring is simply not a loan; it is the purchase of assets being the invoices.

Accounts receivable factoring company / what to think about

If you scour the internet for an online factoring company, you will find that most promise the same things. Most accounts receivable factoring companies promise payment within 48 hours. Some hint at the percentage of the invoice you can expect to be paid, of course it is usually made clear that this will differ depending on the services you require and the agreement reached. In order to obtain an actual figure you of course have to make an online factoring application.



When choosing which accounts receivable factoring company to apply to, you should of course think about whether you know the company is reputable and whether there is any fees involved in obtaining further factoring information from that company. The information about factoring and all else on this website in not intended as any form of advice and should not be understood in that way. If assured correctness in information is sought it should be gathered from other sources such as e.g. professional consultants.