What is Accounts Receivable Factoring?
Accounts Receivable Factoring
Accounts Receivable Factoring is a financial transaction where a startup sells its unpaid customer invoices to a third-party financial company at a discount to receive immediate cash.
Detailed Deep Dive
Accounts Receivable Factoring converts future invoices into immediate operating cash. For enterprise-serving startups with long payment terms (e.g., Net 60 or Net 90), factoring helps maintain positive cash flow without dilution.
Frequently Asked Questions
Q:Is factoring dilutive?
No. Factoring is a debt-free cash management tool that requires no equity warrants or dilution.
Q:What is the cost of factoring?
Startups typically pay a fee (usually 2% to 5% of the invoice value) to the factoring company for advancing the cash.
Quick Facts
- CategoryFunding
- Key ApplicationWorking capital optimization and cash flow acceleration
Coverage Trend12 Weeks
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