Definicja
Factoring turns invoices into cash now, at a cost. The business sells some or all of its outstanding invoices to a factoring company (factor) and receives an advance (typically 70-90% of face value) within 24-48 hours. When the end customer pays, the factor releases the remainder minus its fee.
Two main structures: 1. Recourse factoring — if the customer doesn't pay, the business must buy back the invoice or replace it with another. Cheaper (1-3% monthly cost). 2. Non-recourse factoring — the factor absorbs the default risk. More expensive (2-5% monthly), requires credit checks on the customers.
Factoring is most common in industries with long B2B payment cycles — manufacturing, staffing, transport, textiles, construction supply. It's essentially a trade-off: you pay a fee to get paid now instead of in 30-90 days. The annualised cost can look high (often 10-30%+ APR) but compares favourably to bank loans when inventory or payroll creates a cash gap.
Don't confuse with invoice discounting: in discounting, the business keeps the customer relationship and collects; in factoring, the factor usually takes over collection.