Factoring
/ˈfæk.tər.ɪŋ/
Definitions
- (n.) The financial transaction where a business sells its accounts receivable to a third party (factor) at a discount for immediate cash.
The company improved its cash flow by engaging in factoring with a specialized finance firm.
Forms
- factoring
Related terms
See also
Commentary
Factoring is a commercial finance mechanism distinct from loans; drafting should clarify the transfer of receivables and risk allocation.
This glossary is for general informational and educational purposes only. Definitions are jurisdiction-agnostic but reflect terminology and concepts primarily drawn from English and American legal traditions. Nothing herein constitutes legal advice or creates a lawyer-client relationship. Users should consult qualified counsel for advice on specific matters or jurisdictions.