Factoring is the purchasing of accounts receivable (invoices). Factors are invoices that businesses can sell to companies.
 But in the past, factoring was used by traders to settle their trade debts among each other. It is apparent that factoring is still a very viable business tool for businesses all types and sizes. To choose factoring for your business you should think over the following advantages:
1. Factoring provides a company with a continuous working capital, thus increasing their cash flow.
2. Offering quick results, factoring has no limits. It’s accessible as well as flexible.
3. Factoring stimulates growth and can finance expansion without debt.
4. It can increase production and sales.
5. Factoring is not a lending service, rather it is thought of as a discounted purchase.
Factors simply buy the businesses invoices at a discount and collect a fee. So, they do not normally charge interest. Do not confuse the purchasing of invoices as a loan. Being turned down, many small to mid-size companies apply for a bank loan. But banks think over the amount of assets that a business has in order to secure the loan. Consequently, banks normally require a great deal of collateral from a business before they are approved for a loan. That's why, If and when a loan is approved, it may only be a small percentage of the businesses total accounts receivable.
Factors are different. And they look at the credit worthiness of the business's customers, not the credit of the business itself. Nevertheless, the purchasing of accounts receivable never creates a debt to the business. With this it is simply to get their future money immediately.
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