Invoice & Receivables Financing: Overview, Tips & More
Invoice, purchase order and accounts receivable factoring, or financing, are all pretty much the same thing. They’re short-term liquidity solutions that involve selling rights to expected future income – whether it’s a vendor payment or reimbursement from a credit card company – in return for a lesser amount of up-front capital to be paid out immediately.
This, in turn, enables the seller to fund operations – perhaps needed to fulfill the vendor’s order to pay credit card interchange fees – without having to suffer a potentially debilitating wait for liquidity. The buyer, on the other hand, benefits from a reasonable expectation of turning a quick 3% - 20% return.