Glossary
What is a factoring?
Factoring is selling your receivables to a third party at a discount so you are paid immediately rather than on terms.
Also called: factor, recourse.
It is common in apparel and fabric because terms are long and mills want paying sooner. The factor advances most of the invoice value and collects from the customer directly.
With recourse factoring, an invoice the customer does not pay comes back to you after an agreed period. Tracking which invoices are assigned, and when recourse falls due, is the difference between a financing tool and an unpleasant surprise.