Factoring
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Factoring is simply selling invoices to receive your money today, instead of
waiting 30, 60, or 90 days to be paid. Factoring is an important finance
management tool for a small company that does not create debt, nor does it
require you to give up any ownership in your company. Unlike a loan,
collateral is not required in the process of factoring, there is no
interest, and no debt shows up on your balance sheet. The Fees are paid in
the form of a percentage discount, deducted after all of the invoices have
been paid to the Factor. The amount of discount depends on the length of
time that it takes to collect on the invoices (common ranges of 2.5% to 7%).
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