B2B Factoring

B2B factoring is a form of invoice factoring where a business sells its accounts receivable to a third-party factoring company.

B2B factoring can be viewed as a four-step process:

1. A business sells unpaid customer invoices to a factoring company
2. The factoring company provides a cash advance to the business, typically 80-90% of the invoice value
3. The customer submits invoice payment to the factor
4. The factor sends the remaining value of the invoice to the business, minus a small factoring fee

Small businesses in particular tend to take advantage of the benefits that B2B factoring offers, including a constant short-term boost in working capital.