Understanding the Landscape of Factoring Services
Factoring services aim to improve cash flow within the businesses. These are solutions opted by businesses to sell their accounts receivable to a third-party. They are opted to maintain the working capital of the business. They help provide immediate access to a particular amount, reducing the wait time for the customer. Thus, they are majorly used by small and medium-sized organizations. In the process of factoring , businesses submit their invoice to a factoring company, which provides the amount between 70% and 90% to the business. The remaining balance is transferred after service fee deduction. The service fee of the factor depends on risk involved and the volume of the invoice received from the business. Factoring services allow businesses to convert credit sales into instant cash without taking any loans . The cases where the business is responsible for customer failure of invoice payment are termed as recourse factoring. The cases where the factor accepts the ...