Factoring is a financial service where a business sells its unpaid invoices to a third party (a factoring company) at a discount in exchange for immediate cash. The factoring company then collects payment from the customer, allowing the business to improve cash flow and cover operational expenses quickly.
Factoring is one of the oldest forms of financing, with roots tracing back to ancient Mesopotamia around 2000 BCE. Merchants used early forms of factoring to manage trade risks by selling their accounts receivable to third parties.
Factoring also played a critical role in the European trade of the Middle Ages, where it was particularly prevalent in the textile industry.
During the colonial period in America, factoring evolved as merchants used it to finance agricultural exports like tobacco and cotton.
By the 20th century, factoring became formalized as a financial service offered by banks and independent financial institutions.
Today, factoring is a global industry, with an estimated market size exceeding $3.5 trillion annually, driven by international trade and the need for businesses to maintain steady cash flow.
Factoring comes in various forms, each suited to different business needs.
Each type offers unique advantages, enabling businesses to choose a solution tailored to their cash flow requirements.
The most common type, where the business remains responsible for unpaid invoices if the debtor defaults.
Non-recourse factoring shifts this risk to the factoring company, providing greater security but often at a higher cost.
International factoring supports cross-border trade by facilitating transactions between exporters and importers in different countries.
Spot factoring, or single-invoice factoring, allows businesses to sell individual invoices rather than committing to a long-term agreement.
Full factoring, on the other hand, is a comprehensive service that includes credit control, collections, and protection against bad debt.
| % Allocation to Score | ||
|---|---|---|
| 7.4% | 10% | Public Reviews Overall Score |
| 9.9% | 15% | Public Reviews % 5 Star Ratings |
| 10.4% | 15% | Public Reviews % 1 Star Ratings |
| 4.3% | 5% | Better Business Bureau Grade |
| 9.5% | 10% | Number of BBB Complaints Closed in the Last 12 Months |
| 9.5% | 10% | Number of BBB Complaints in the Last 3 Years |
| 4.5% | 10% | Assistance Availability |
| 6.8% | 15% | Contract length & flexibility |
| 7.5% | 10% | Other benefits/offerings |
| 69.9% | 100.0% | Total Score |
| % Allocation to Score | ||
|---|---|---|
| 9.0% | 10% | Public Reviews Overall Score |
| 11.7% | 15% | Public Reviews % 5 Star Ratings |
| 13.7% | 15% | Public Reviews % 1 Star Ratings |
| 5.0% | 5% | Better Business Bureau Grade |
| 9.7% | 10% | Number of BBB Complaints Closed in the Last 12 Months |
| 9.7% | 10% | Number of BBB Complaints in the Last 3 Years |
| 6.8% | 10% | Assistance Availability |
| 12.5% | 15% | Contract length & flexibility |
| 7.1% | 10% | Other benefits/offerings |
| 85.1% | 100.0% | Total Score |
| % Allocation to Score | ||
|---|---|---|
| 8.8% | 10% | Public Reviews Overall Score |
| 12.5% | 15% | Public Reviews % 5 Star Ratings |
| 12.9% | 15% | Public Reviews % 1 Star Ratings |
| 5.0% | 5% | Better Business Bureau Grade |
| 0.0% | 10% | Number of BBB Complaints Closed in the Last 12 Months |
| 0.0% | 10% | Number of BBB Complaints in the Last 3 Years |
| 3.4% | 10% | Assistance Availability |
| 6.8% | 15% | Contract length & flexibility |
| 9.2% | 10% | Other benefits/offerings |
| 58.6% | 100.0% | Total Score |
| % Allocation to Score | ||
|---|---|---|
| 9.4% | 10% | Public Reviews Overall Score |
| 13.4% | 15% | Public Reviews % 5 Star Ratings |
| 14.1% | 15% | Public Reviews % 1 Star Ratings |
| 5.0% | 5% | Better Business Bureau Grade |
| 10.0% | 10% | Number of BBB Complaints Closed in the Last 12 Months |
| 10.0% | 10% | Number of BBB Complaints in the Last 3 Years |
| 4.8% | 10% | Assistance Availability |
| 12.5% | 15% | Contract length & flexibility |
| 7.9% | 10% | Other benefits/offerings |
| 87.1% | 100.0% | Total Score |
| % Allocation to Score | ||
|---|---|---|
| 9.2% | 10% | Public Reviews Overall Score |
| 12.6% | 15% | Public Reviews % 5 Star Ratings |
| 13.8% | 15% | Public Reviews % 1 Star Ratings |
| 4.3% | 5% | Better Business Bureau Grade |
| 7.9% | 10% | Number of BBB Complaints Closed in the Last 12 Months |
| 5.8% | 10% | Number of BBB Complaints in the Last 3 Years |
| 3.1% | 10% | Assistance Availability |
| 4.4% | 15% | Contract length & flexibility |
| 8.8% | 10% | Other benefits/offerings |
| 70.0% | 100.0% | Total Score |
| % Allocation to Score | ||
|---|---|---|
| 9.2% | 10% | Public Reviews Overall Score |
| 13.2% | 15% | Public Reviews % 5 Star Ratings |
| 13.8% | 15% | Public Reviews % 1 Star Ratings |
| 4.0% | 5% | Better Business Bureau Grade |
| 6.2% | 10% | Number of BBB Complaints Closed in the Last 12 Months |
| 4.3% | 10% | Number of BBB Complaints in the Last 3 Years |
| 4.3% | 10% | Assistance Availability |
| 6.8% | 15% | Contract length & flexibility |
| 9.2% | 10% | Other benefits/offerings |
| 71.0% | 100.0% | Total Score |
| % Allocation to Score | ||
|---|---|---|
| 9.7% | 10% | Public Reviews Overall Score |
| 14.2% | 15% | Public Reviews % 5 Star Ratings |
| 14.6% | 15% | Public Reviews % 1 Star Ratings |
| 5.0% | 5% | Better Business Bureau Grade |
| 10.0% | 10% | Number of BBB Complaints Closed in the Last 12 Months |
| 10.0% | 10% | Number of BBB Complaints in the Last 3 Years |
| 7.7% | 10% | Assistance Availability |
| 13.1% | 15% | Contract length & flexibility |
| 4.6% | 10% | Other benefits/offerings |
| 88.9% | 100.0% | Total Score |
| % Allocation to Score | |||
|---|---|---|---|
| 9.4% | 10% | Public Reviews Overall Score | |
| 13.4% | 15% | Public Reviews % 5 Star Ratings | |
| 14.2% | 15% | Public Reviews % 1 Star Ratings | |
| 5.0% | 5% | Better Business Bureau Grade | |
| 9.2% | 10% | Number of BBB Complaints Closed in the Last 12 Months | |
| 9.4% | 10% | Number of BBB Complaints in the Last 3 Years | |
| 6.3% | 10% | Assistance Availability | |
| 12.5% | 15% | Contract length & flexibility | |
| 9.2% | 10% | Other benefits/offerings | |
| 88.5% | 100.0% | Total Score | |
