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Small Business Factoring

Document: Small Business Factoring

Definition: Factoring is a transaction where a small business owner sells it's invoices to a factoring company at a discount.  For example, a $100 accounts receivable invoice may be sold to a factoring company for $90.  These numbers are for illustration purposes only.  The advantage of factoring is the focus is on the value of the invoices and not on the credit worthiness of the small business.  Typically small business factoring is used to help with cash flow.

One disadvantage of factoring is instead of the customer paying the small business, they pay the factoring company directly.  In many industries this won't create any issues but there are cases where a customer will not appreciate having to deal with another company in the payment process.

You can find small business factoring templates and printable copies at the following sites:

Site Name	PDF	Word	Txt	Other	Notes
doctstoc	Yes	Yes	No	Yes	XLS format is "other" format that is available..