Glossary Terms

Accounts Receivable Financing

Accounts receivable financing, also known as “factoring,” is a practice in which a business sells its invoices to a third-party financial company to collect upon.

Accounts receivable financing, also known as “factoring,” is a practice in which a business sells its invoices to a third-party financial company to collect upon.

​Some businesses choose to finance their accounts receivable to obtain cash more quickly than they would if they waited for their customers to pay within terms (usually 30-60 days). Though factoring companies can typically advance a business cash for its invoices within 24 hours, it often comes at a steep fee. Still, factoring is a viable option for many businesses that need funds immediately to continue operations.