In the world of invoice factoring, careful distinction should be made when describing the different participants. This is how factoring companies talk about different parties to the factoring transaction. When a prospect comes seeking accounts receivable financing, they are considered the “client.” Throughout the factoring relationship the borrower will be known as the “client.”
Each factoring client has “customers” who they provide services or products to and then invoice. Factors make advances on invoices to the client’s customers. Customers are also known as “account debtors.” As always the credit worthiness of the account debtor will be the condition upon which advances are considered.
A receivable factoring client receives advances on customer invoices.