Factoring company

What is a factoring company?

A factoring company is a financial institution that specialises in factoring for businesses. The factoring company buys outstanding invoices from the company at a certain discount and grants the company direct financing in exchange for the right to collect payments from customers. The factoring company then transfers the responsibility of collecting the invoices to itself and can take collection measures if necessary. The factoring company makes money by charging a fee for the financing costs and the risks it takes in collecting the payments.

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