Understanding the Difference Between Factoring and Bill Discounting | Falcon Invoice Discounting
Explore the key differences between factoring and bill discounting. Learn how Falcon Invoice Discounting can streamline your cash flow and optimize your financial operations. Discover which option suits your business needs best. Certainly! Both factoring and bill discounting are financial tools used by businesses to improve their cash flow, but they function in slightly different ways. Here’s a breakdown of the differences: Factoring Definition : Factoring is a financial transaction where a business sells its accounts receivable (invoices) to a third party (a factor) at a discount. The factor then collects the payment directly from the business’s customers. Process : The business sells its outstanding invoices to the factor. The factor advances a percentage of the invoice value to the business immediately. When the invoices are paid by the customers, the factor receives the payment and deducts a fee. The remaining balance is paid back to the business, minus the factor’s fee. Adva...