Turn outstanding invoices into working capital, without the wait.
activ factoring AG publishes independent, plain-language information on how business factoring and receivables financing work — so finance teams can understand the mechanics before they talk to any provider.
This website is provided for general information only and does not constitute a financial offer. See our Terms of Service.
What business factoring actually involves
Factoring lets a company sell its outstanding invoices to a specialised partner rather than waiting for customers to pay. Here is what typically happens across three areas.
Invoice purchase
A business assigns unpaid, undisputed invoices to a factoring partner and receives an advance against their value, usually a large majority of the face amount.
Credit risk review
The debtor's payment history and creditworthiness are assessed before invoices are accepted, which is why factoring is closely tied to credit management.
Collections & reporting
Depending on the structure, collections may be handled by the factor or the business itself, with regular statements on outstanding and settled balances.
How a typical factoring arrangement runs
The exact sequence varies by provider and structure, but most arrangements follow a similar pattern.
Application & review
The business submits company and debtor information, and the factor reviews credit quality and contract terms.
Invoices assigned
Approved invoices are assigned to the factor, who verifies them against delivery or service records.
Funds advanced
An agreed percentage of the invoice value is advanced, with the remainder held as a reserve.
Collection & reserve release
Once the customer pays, the reserve is released to the business, minus the agreed service fee.
Sectors that typically rely on receivables financing
Businesses with long payment terms or seasonal cash flow gaps are the most frequent users of factoring arrangements.
All figures, examples, and process descriptions on this website are illustrative and provided for general educational purposes only. activ factoring AG does not process payments, extend credit, or conclude financing agreements through this website. Please read our Terms of Service for full details.
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