Factoring In Business

A company which is owed money by trade debtors faces the risk of slow payment or default on those debts, which can put strain on its cash flow. One of the ways it can mitigate this danger is by 'factoring' them. Special companies exist (factors) which will pay the company a high proportion of the amount it is owed, in return for the right to collect the debts from the debtors. The company gets a high percentage of the amount it is owed direct from the factor. The factors chase the money and keep the difference.