How Does AR Factoring Work?

In Accounts Receivable Factoring, businesses sell their unpaid invoices to a factoring company for a percentage of their total value, typically 70% to 90%. The factoring company then collects payments directly from the customers, deducts a fee, and remits the remaining balance to the business, providing immediate cash flow while transferring the responsibility of collection to the factoring company.

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Credit Risk

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Collections

Deductions

Cash Application

Customer EIPP

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