How Does Receivable Financing Differ From Factoring?

How Does Receivable Financing Differ From Financing?

Factoring is the outright sale of accounts receivable for an amount less than face value. Fees charged are generally based on the sales amount and stated as a discount percentage.

Receivable financing is the borrowing of cash against a total of eligible receivables, usually in the form of a line of credit. Fees are usually based on the average funds employed, and rates are generally stated as a monthly interest rate.