is a vital financial arrangement that allows businesses to accelerate their cash flow by receiving immediate payment for their accounts receivable. Rather than waiting for customers to make the payment, businesses can sell their pending invoices to a third party, known as a factor, at a discounted rate. In return, the factor assumes or takes over the risk of non-payment and provides an upfront payment to the business, ensuring a steady cash flow.
Factoring applies to both domestic and international trade. It offers flexibility in contract negotiation, enabling parties to determine terms of the agreement, including costs, timeframes, legalities, and more1