Factoring and Invoice Discounting
The supplier sells his receivables in the form of invoice to the factor, who makes an advance payment of 60-85% of the receivable amount. The factor manages/collects the full amount from the buyer in due course and pays the balance amount due to the supplier after deducting his commission and charges
Is the practice of using a seller’s unpaid accounts receivable as collateral for a loan/finance. invoice discounting is a form of short-term borrowing against your outstanding invoices. It is usually used to help improve a company’s working capital and cash flow. In this scenario the seller collects the payment from the buyer and settles the payment at maturity.