Debt Factoring Domain Name For Sale



Disadvantages of Debt Factoring

Debt factoring is the process of selling customer accounts receivable to a specialized finance company known as a factor. The invoices are purchased at a discount and then the factor collects directly from the customers.

Factoring can have several disadvantages for businesses that should be considered

  • Cost - Factoring may be an expensive way to obtain financing. Accounts receivable are sold at a discount. This may imply a cost of capital great than other sources of financing.
  • Outside Influence - Depending on your specific arrangement, a factor may begin to have influence over your business. They may not allow you to deal with certain customers or attempt to change your sales practices.
  • Customer Relations - Since your customers will deal directly with a factor to pay invoices, an unprofessional factor can negatively impact your customer's perception of your business.
  • Bad Debt Liability - If you are using recourse factoring, any bad debts remain your responsibility.


 Debt Factoring