Invoice Factoring Service in Texas

Invoice Factoring with Hub City

Factoring is a sort of debtor financing in which a company sells its accounts receivable (i.e., invoices) to a third party (called a factor) at a discount. A company may factor its receivable assets in order to fulfil its current and immediate cash demands. Exporters that want to sell their receivables to a forfaiter utilise forfaiting as a factoring solution in international trade finance. 

Accounts receivable factoring, invoice factoring, and accounts receivable finance are all terms used to describe factoring. Accounts receivable finance is a more correct phrase for a type of asset-based lending backed by accounts receivable. The Commercial Finance Association is the industry’s premier trade group for asset-based lending and factoring.

Factoring is not the same as invoice discounting in the United States (which is referred to as an assignment of accounts receivable in American accounting, as defined by FASB within GAAP). Factoring is the sale of receivables, whereas invoice discounting (also known as “assignment of accounts receivable” in American accounting) is a type of borrowing in which the accounts receivable assets are used as collateral.