- Sale of a firm's accounts receivable to a financial institution known as a factor. The New York Times Financial Glossary
* * *factoring fac‧tor‧ing [ˈfæktərɪŋ] also ˈdebt ˌfactoring, ˈinvoice ˌfactoring noun [uncountable]FINANCE when a financial institution called a factor takes over the administration of a company's receivables (= money owed by suppliers). The factor pays the business the money that suppliers owe to it immediately, in return for a percentage. The business benefits by getting the money immediately, improving its cash flow. Invoice factoring is a form of finance that can be cheaper than bank loans or overdraft S:
• With invoice factoring, we provide an immediate advance of up to 80% of the value of invoices.
• The factoring companies have been heartened by signs of increased demand after a difficult year.ˈexport ˌfactoring FINANCEa service provided by some large international banks for an exporter, in which the bank arranges to obtain payment directly from the importer. This allows the exporter to borrow part of the importer's debt before being paid in full and therefore improves the exporter's cash flow:
• If international trade continues to grow, export factoring should increase in importance.
* * *factoring UK US /ˈfæktərɪŋ/ noun [U] (also invoice factoring) FINANCE► a situation in which a company buys the right to collect payments and debts owed to another company and charges for doing this: »
You can decrease the burden of unpaid debts by selling those debts to a factoring service.
Financial and business terms. 2012.