Invoice Factoring

How does Invoice Factoring Work?

When a business uses invoice factoring, it essentially sells ownership of incoming payments to a third party, in exchange for immediate payment. This is similar to credit factoring, in which a business (usually a merchant business) sells future receivables based on credit card transactions in exchange for upfront payment. Invoice factoring is one of the services which can be arranged with the assistance of a debt collection agency, and is an alternative to straightforward debt collection.

Invoice Factoring or Debt Collection

When your business is owed outstanding payments on accounts, it might be harder to use invoice factoring due to the associated risk of the client not paying the outstanding amount. An option which is frequently successful is debt collection, whereby your business can pay professional collection agents to set about applying the necessary pressure to get clients to settle outstanding amounts. Face to face meetings, coupled with lawful and persistent pressure, can help to foster favorable results, without making your company appear to be ‘the bad guys’.