IACFB Academy
What is Commercial Factoring?
International Association of Commercial Finance Brokers
What is Factoring?
Commercial Factoring
Factoring is a powerful form of commercial finance that provides businesses with immediate cash by converting their unpaid invoices into working capital. Unlike a traditional bank loan, factoring is not debt — there are no repayments, no interest charges, and no new liabilities created on the company’s balance sheet. Instead, a business simply sells its accounts receivable (invoices) to a factoring company, which advances a percentage of the invoice value right away and then collects payment from the customer when due. This process gives small and mid-sized businesses the cash they need to cover expenses, make payroll, or take on new contracts — all without borrowing a single dollar.
Commercial Factoring Volume / Statistics
U.S. Factoring Services
Worldwide Factoring Services
Commercial Factors (U.S.)
Factoring is Never
a Loan
Factoring is the purchase of a company’s invoices, not the extension of credit. There’s no debt created, no interest to repay, and no new liability on the business’s balance sheet. The business is simply converting an asset — its accounts receivable — into immediate cash.
Approval Based on Customer Credit
In factoring, approval is primarily based on the creditworthiness of your customers, not your business. This makes factoring ideal for new or fast-growing companies that can’t yet qualify for traditional bank financing but sell to solid, creditworthy clients
Continuous Source of Working Capital
Factoring is a self-liquidating form of finance. As invoices are paid, new invoices are purchased — creating a continuous flow of cash. Many businesses use factoring as an ongoing, scalable funding solution that grows automatically with their sales volume.
Professional Accounts Receivable management
When businesses factor their invoices, they also gain the benefit of outsourced receivables management. Factors handle collections, credit checks, and account monitoring — saving time and providing valuable credit insight that helps reduce bad debt losses.
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