Factors purchase invoices at a discount, which helps companies get paid more quickly. How to use factoring.
By Geoff Williams

Factoring used to have a stigma -- many considered it a last resort for businesses, somewhere between a liquidation fire sale and bankruptcy. But both the practice and the perception have changed in recent years, and those who still readily dismiss factoring probably don't fully understand it.

Here's how factoring basically works: A bank or other financial institution purchases a company's outstanding accounts receivable or invoices at a discount, giving that company quick access to cash.