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Finance & Banking vocabulary · Corporate Finance

Factoring

Meaning in finance & banking, with examples

/ˈfæktərɪŋ/nounCommon term

In finance & banking, factoring means: A form of financing in which a company sells its unpaid invoices to a factoring company or bank at a discount and receives cash before its customers pay.

In Turkish: faktoring

How it is used

Used in SME and trade finance. With recourse factoring, the seller still carries the risk if the buyer does not pay; without recourse, the factor takes that risk. Factoring often includes collecting the invoices as well. Exporters use export factoring to get paid sooner.

Example sentences

  1. Factoring lets us get paid within days instead of waiting 90 days for our customers.

  2. The bank offers export factoring without recourse for approved buyers.

Common collocations

  • factoring company
  • export factoring
  • factoring with recourse
  • non-recourse factoring
  • invoice factoring
  • receivablesMoney that customers owe a company for goods or services already delivered, shown as an asset on the balance sheet.
  • working capitalThe money a business has available for its daily operations, calculated as current assets minus current liabilities.
  • trade financeBanking products that help importers and exporters pay and get paid safely, and that finance goods while they are produced, shipped or sold.
  • SMEShort for small and medium-sized enterprise: a company below certain limits for staff and turnover. In the EU, SMEs have fewer than 250 employees.
  • cash flowThe movement of money into and out of a business over a period. Positive cash flow means more money is coming in than going out.

More terms: Corporate Finance

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This page explains English vocabulary for learners. It is not financial advice.