What is Factoring?

This is a short term method of finance where credit notes are sold to factor houses for discounted prices. it allows a business to get their money instantly adn so improves cash flow. However factor houses take a percentage of the credit note. For example, if a business was waiting for a payment of £1000. They could take it to a factor house and get £900 for the same payment. This means that the company keeps 90% of the money, and gets the money instantly.