There is a clear difference between invoice financing and invoice factoring. With factoring, you will effectively sell those unpaid invoices to the finance company instead. However, if you do this, you will not be responsible for collecting the payment from the customer as this job will now fall to the factoring company. The company will give you payment for those invoices upfront but will keep a percentage of the total as their fee.
Invoice factoring can be advantageous in some situations as it can alleviate the responsibility of chasing customers and going through the collection process. However, it’s important to remember that invoice factoring may affect your interaction with your customers. The customer will see that you are working with an invoice factoring company as they will receive the demand for payment from a different entity. They may think that your company is now in financial difficulty as you are having to reach out to a factoring company for assistan
