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What is invoice factoring, and the benefits it offers? 

Invoice factoring is the purchase of a company's open invoices or accounts receivable.  The primary benefit of invoice factoring is to help a company struggling with cash flow get back on track.  

How? When the business issues an invoice to its customer, it is typically under credit terms of 30 to 90 days, which can cause cash flow restraints. With factoring, the business sells those unpaid invoices to a factoring company typically receiving 80% to 95% of the value of the invoices within 24 hours of issuing the invoices. 

Factoring can also help your business secure more customers by extending credit terms to existing and potential customers of 30 to 90 days, which they should find attractive.


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