Review:
Factoring
overall review score: 4.2
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score is between 0 and 5
Factoring is a financial transaction and a type of debtor finance in which a business sells its accounts receivable (i.e., invoices) to a third party (called a factor) at a discount.
Key Features
- Provides immediate cash flow
- Reduces risk of bad debts
- Can improve credit rating
Pros
- Helps businesses improve cash flow
- Reduces the burden of collecting payments from customers
- Can be a useful tool for businesses with seasonal fluctuations in cash flow
Cons
- Cost of factoring fees can be high
- Loss of control over customer relationships