what is a factoring company 
a factoring company specializes in accounts receivable financing or more simply factoring a factoring company purchases invoices from businesses that need an immediate boost in their cash flow a business may be in the position of waiting 30 to 90 days for its customers to pay their invoices for a company that is growing rapidly and needs cash to take advantage of new business opportunities this can be too long to wait therefore they may work with a factoring company the factoring company will pay the full amount of the company s invoices less a discount for commission and fees the bottom linea factor can act as a source of funding for a company a factor is usually a financial institution it agrees to pay a company the value of its outstanding invoices less a discount for commission and fees this practice is called factoring or accounts receivable financing the factoring company will set specific terms and conditions depending on the risk involved in the transaction the practice of factoring is beneficial because it allows a company to boost its cash flow in the short term for a factoring company these transactions are beneficial because they earn a factoring fee for each transaction most factoring companies take between 1 and 5 of the total amount of the invoice value but this amount can vary based on the factoring volume client creditworthiness business stability and other considerations 