Even though the names are interchangable, factoring and accounts receivable financing utilize a company’s due and owing invoicing as collateral to make cash advances. Having a cutomer owe you money for work you have completed is an asset. The factor uses that asset in order to fund operational capital. Much like a standard credit card, when you go into a store and purchase something, the store owner gets paid within a few days by the issuing credit card bank, while you go home and pay your bill at a later date.
Factoring works under the same principal where you are acting as the store owner and require the payment now instead of later. With large transactions it could be the difference between taking on the sale or passing because you could not pay for it out of current company finances.
Our efforts are utlimately to allow you to seek larger sales with better customers.