FACTORING
We have already alluded to the fact that a large portion of working capital is tied up in accounts receivables at many companies. These are moneys due from customers for services or products that have been delivered and invoiced but for which payment has not yet been received. This is not unusual, typical payment terms are 30–60 days and may even be as long as 90 days. Companies wanting to receive their cash faster look to banks and specialist finance companies for factoring services by selling them the rights to the cashflows represented by accounts receivable. Factoring may be arranged such that the factor collects directly from the seller or the seller carries out this function and remits proceeds as they are received.