The term factor financing refers to a financial transaction where a business sells a portion of its unpaid invoices to a factoring company at a discounted rate.
The factor company provides a business with finance by giving the business an agreed proportion of the value its accounts receivable in exchange for its total value upon receipt.
Factor financing helps to improve the cash flow of a business, providing it with valuable resources which are often used to aid the growth of the company through expansion or investment in capital.