Define: Factoring

UK Accounting Glossary

Definition: Factoring


Quick Summary of Factoring


This means receiving funds instantly without having to wait for payment from a customer. A factoring company pays a percentage of the invoice to the business being paid, as much as 95%, and takes a cut of the cost.



What is the dictionary definition of Factoring?

Dictionary Definition


  1. A financial transaction whereby a business sells its accounts receivable to a third party (called a factor) at a discount.
  2. math The process of factorisation.

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Full Definition of Factoring


Factoring is a financial transaction and a type of debtor finance in which a business sells its accounts receivable to a third party at a discount. A business will sometimes factor its receivable assets to meet its present and immediate cash needs.


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Examples of Factoring in a sentence


It was just 8% of total world factoring volumes in 1992, according to Factors Chain International.

A big advantage of factoring and invoice discounting is how they enable fiscal adaptability and flexibility.

For smaller companies, suffering from cash flow problems, factoring may prove a solution.

The final chapter debates the legal structure of international factoring.



Cite Term


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https://payrollheaven.com/define/factoring/
Modern Language Association (MLA):
Factoring. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. September 17, 2019 https://payrollheaven.com/define/factoring/.
Chicago Manual of Style (CMS):
Factoring. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. https://payrollheaven.com/define/factoring/ (accessed: September 17, 2019).
American Psychological Association (APA):
Factoring. PayrollHeaven.com. Retrieved September 17, 2019, from PayrollHeaven.com website: https://payrollheaven.com/define/factoring/

Definition Sources


Definitions for Factoring are sourced/syndicated from:


This glossary post was last updated: 26th December 2018.