What is Factoring? How is it different from other financing options.

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Factoring is a financial transaction where a company sells its accounts receivable to a third party at a discount.

Factoring provides immediate cash flow by selling invoices to a third party at a discount.
Unlike traditional loans, factoring is not a loan but a sale of accounts receivable.
Factoring is based on the creditworthiness of the company's customers rather than the company itself.
Factoring can be a quicker and easier financing option compared to traditional loans.
Example: Company A sells $10,000 worth of invoices to a factoring company for $9,500 to receive immediate cash flow.

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