Explanation
Factoring converts accounts receivable into working capital without taking on debt and is common in B2B industries with long payment cycles like trucking, staffing, and manufacturing.
Recourse factoring requires the business to buy back unpaid invoices; non-recourse factoring transfers credit risk to the factor.
Examples
- •Advance rate: typically 80–95%
- •Factor fee: 1–5% per 30 days
- •Common in trucking, staffing, manufacturing
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