How is accounts receivable factoring different than commercial lending?
Factoring differs from commercial lending because it involves a transfer of assets rather than a loan of money. In assessing risk, therefore, we look primarily to the quality of the asset being purchased (i.e. the ability to collect client receivables), rather than to the underlying financial condition of the seller/client. This focus makes factoring a suitable vehicle for many growing businesses when traditional commercial borrowing proves either impractical or unavailable.
