Factoring

Factoring involves selling accounts receivable to a third party (factor) at a discount. The factor collects the receivables and provides immediate cash flow to the seller. Factoring can be with recourse, where the seller retains some risk. It can also be without recourse, where the factor assumes all risk.

Examples of Factoring Companies include Bibby Financial Services, ALTLINE, and RTS Financial.

Types of Factoring: Recourse Factoring, Non-recourse Factoring.

Benefits of Factoring: Immediate cash flow, reduced credit risk (in non-recourse).

Applications: Used by small businesses, large corporations, and startups.