Loans and money

The buyer pays the seller for the outstanding receivables on their average due date. The factor carries out the entire credit and collection process. The factor is paid a fee for providing this service that takes into account estimated credit losses.
The receivables may be sold with or without recourse.

Here the seller is paid by the factor in advance (before the average due date) and receives an amount based on the invoiced amount less an allowance for credit losses. In turn the factor is paid interest on average balances some way above that paid on loans made to companies of a similar credit standing.