Invoice factoring: pros and cons
With recession making cash tighter, invoice factoring and discounting is on the rise in the UK. But many businesses are still wary about the practice.
This article explores the cultural resistance to factoring, as well as some of the benefits and risks as perceived by AccountingWEB members.
What is factoring?
As our Guide to Alternative Finance 2012 explained, invoice factoring and discounting involves selling sales invoices to a finance provider, who pays a fixed percentage of the invoice in advance. When the invoice is paid, the finance provider pays the balance to the seller, minus their interest and administration costs.
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- What is factoring?
- The rise of factoring
- What are the benefits of factoring?
- What are the risks of factoring?