Account Receivable Factoring

How Account Receivable Factoring Works

The term ‘account receivable factoring’ is used to describe the process whereby an individual or company sells ownership of an incoming debt or multiple debts to a third party, who pays cash for money which will be received at a later date. This is similar in principle to credit factoring, although in the case of credit factoring, the sale is based on a payment which has already been made but is yet to reflect in the business’s bank account.

Account Receivable Factoring and Debt Collection

Account receivable factoring is one possible way for individuals or companies to recover money owed to them by debtors, yet debt collection endeavors may also be considered. A debt collection agency can contact debtors on behalf of those who wish to be paid the money which they are owed. Through the right combination of persistence and intensity, a debt agency may prove highly successful in collection endeavors and can save a lot of unnecessary extra expense for the client by finding resolution which does not require additional arbitration in a court of law.