What Is Factoring?

Factoring helps businesses convert their deferred sales into cash without waiting for maturity. This speeds up cash flow, supports the balance sheet structure and allows businesses to manage a healthier growth process. In the most general sense, it is the assignment of deferred receivables arising from goods and service sales to a factoring institution, and the management of these receivables by that institution. This transaction takes place between the seller company, the debtor company and the factoring company.

Who Are the Parties to a Factoring Transaction?