Commercial finance glossary
Factor UK
The Term Factor UK is used in reference to a financial service within the United Kingdom where businesses are able to obtain finance against their accounts receivables to improve the businesses cash flow. This is done through a factoring company.
The process of factoring occurs when a business sells its accounts receivable at a discounted rate to a factoring company. The business is then guaranteed the agreed percentage up front, with the total money eventually reclaimed going to the factor company.
Factoring is used mainly by small and medium sized businesses in order to improve their cash flow and provide extra funds for growing and investing in the business.
