What is the difference between Factoring, Invoice Financing & account receivables finance?
Accounts receivable factoring is a transaction in which a third party (factor) purchases a business's invoices at a discount. The factoring company, as a result, now owns the accounts receivables.
Invoice financing, also known as accounts receivable financing, is a loan in which a business pays a predetermined percent of their invoices to a lender as a fee for the loan. In this case, the invoices serve as collateral as the business pays off lending fees when invoices are paid. Account receivable financing is very similar to bank loans but with much higher lending rates.
While both solutions are meant to solve short term cash flow problems, invoice financing generally carries much higher costs and risks than receivable factoring.
We are known as one of the best factoring companies due to our low monthly minimums, competitive rates and ability to help our client companies grow.