| Factoring (finance) |
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Information AboutFactoring (finance) |
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In Corporate Finance , factoring is the process of one company (seller) selling their "business to business" invoices (A/R) to a factoring company (assignee) as a means of maintaining positive cash flow. The assignee will generally hold a lien on the A/R of the seller per Uniform Commercial Code and charge a nominal fee. Invoices are stamped with an assignment and legally binding payment instructions to direct all payment to the assignee. There are usually three parties involved when an invoice is factored:
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