Easier to qualify for than bank loans, as it relies on customer credit. : Earns a profit from the discount and service fees.
Provides immediate cash flow to meet payroll or operational expenses without taking on traditional debt. buying accounts receivable
It is important to differentiate between buying receivables (factoring) and borrowing against them (financing): Easier to qualify for than bank loans, as
: A business provides its unpaid invoices for completed goods or services to the buyer. It is important to differentiate between buying receivables
Secures an asset that represents a completed commercial transaction. Critical Distinctions
Buying accounts receivable (AR), also known as , is a financial transaction where a third-party buyer (a "factor") purchases a company's outstanding invoices at a discount to provide that company with immediate liquidity. How the Transaction Works The process typically follows these structured steps: