Debt Factoring Domain Name For Sale



How Debt Factoring Works

Debt factoring arrangements take place when a business sells its accounts receivables to a factor at a discount. The factor then collects the receivables from the customers. This arrangement is used to improve cash flow for a business.

Factoring begins when a factor evaluates a business and its receivables. The factor will want to get an overall idea of how the business operates and the collectibility of its receivables. These will be key factors in creating the factoring agreement and determining the discount.

When a factoring arrangement is first entered into, the factoring company will typically issue an advance for outstanding approved invoices. The payment will be at a value or percentage agreed to within the factoring agreement. The factor would then commence collecting outstanding accounts receivable directly from the customer.

Any new sales would involve both the customer and the factor. Once a sale takes place an invoice would be sent to the customer with instructions to pay the factor directly. The factor also receives notification of the invoice and makes payments to the business at the levels agreed to within the factoring agreement.

Debt factoring is typically a long term arrangement. Since the factor becomes involved in the businesses sales processes. If a business no longer wants to use a factor, it can be a process of several months to end the service.

 Debt Factoring