BUSINESS FINANCE GLOSSARY
Factoring
Invoice Factoring
The sale of receivables to a factor, often at a discount.
What does Factoring mean?
The sale of receivables to a factor, often at a discount. Professionals may calculate, document or apply this concept differently depending on the transaction, accounting method, lender policy and governing documents. Borrowers should confirm the precise definition used in any term sheet or agreement.
Factoring in context
A trucking company sells a $10,000 invoice to receive cash before the customer pays.
Why it matters in financing
Factoring can influence how a lender, investor or advisor evaluates risk, pricing, structure, repayment capacity or transaction economics. It should be considered together with the complete financial picture rather than used alone.
Related business finance terms
Educational information only. This definition is general, may not match a particular lender or contract, and is not financial, accounting, tax or legal advice.