"Factoring" a new form of alternative financing
Factoring is when companies sell their accounts receivable in exchange for a cash advance ![[factoring]](http://s.wsj.net/public/resources/images/MK-AS207_stfact_DV_20081006172559.jpg)
that’s generally about 80% of the invoices outstanding. The “factor” — which might be a traditional lender or an independent factoring company — will then use the 20% or so portion kept on reserve to cover its fees and then return the balance to the business after all receivables are paid in full. Fees on factoring tend to range from 2% to 6% of the invoice amounts, depending on how long it takes the factor to collect the client payments and the credit-worthiness of those clients. Read more:
Technorati Tags: Bert Goldberg, International Factoring Association, Kelly Spors, Smalltalk, NCET, Nevada’s Center for Entrepreneurship and Technology
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