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.


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.


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

To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.

Page URL
Modern Language Association (MLA):
Factoring. Payroll & Accounting Heaven Ltd. November 12, 2019
Chicago Manual of Style (CMS):
Factoring. Payroll & Accounting Heaven Ltd. (accessed: November 12, 2019).
American Psychological Association (APA):
Factoring. Retrieved November 12, 2019, from website:

Definition Sources

Definitions for Factoring are sourced/syndicated from:

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