Guide to factoring and invoice discounting
Here we outline the basics of factoring and points to watch out for.
Factoring is prepayment against your sales ledger. The factor (often a bank) provides cash, up to a certain per centage of the invoice bill. On payment of the invoice (direct to the factor), the balance less the factor's charges is handed over to the company.
It allows the business, at a cost, to flexibly increase working capital and improve cash flow.
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