Factoring Mechanics

1. Purchase Order sent to client for goods or services provided

2. Goods/services provided to customer

3. Invoice for $1,000 for goods/services sent to customer

4. Factor notified of $1,000 invoice

5. Factor advances $800 to client (80% of invoice face value) – Day 1*

6. Invoice ($1,000) is paid to factor by customer – Day 30

7. Invoice balance ($180), less 2% factor commission, paid to client by factor – Day 31*

*Note: Advance rates and commissions (i.e., discount rate) offered by factors vary based on certain criteria.