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LSDefine

Simple English definitions for legal terms

factoring

Read a random definition: statement of utility

A quick definition of factoring:

Factoring: Factoring is when a company sells its unpaid bills to another company for a lump sum of money. The company buying the bills is called a factor. The factor gets the money from the bills when they are paid, and the company selling the bills gets money right away to help their business.

A more thorough explanation:

Factoring is when a company sells its accounts receivable to another company, called a factor, for a lump sum of money. The factor then collects the money owed by the accounts and keeps a percentage as profit.

For example, let's say a small business has $50,000 in accounts receivable from various customers. They need cash immediately to pay for expenses, so they sell their accounts receivable to a factor for $40,000. The factor then collects the $50,000 from the customers and keeps a percentage, say 10%, as profit. The small business gets the cash they need right away, and the factor makes a profit from collecting the money owed.

Another example could be a clothing manufacturer who sells their products to a department store. The department store agrees to pay in 60 days, but the clothing manufacturer needs cash now to pay for materials and labor. They sell their accounts receivable to a factor for a lump sum of money, and the factor collects the money owed by the department store in 60 days.

Overall, factoring allows companies to get immediate cash for their accounts receivable, while the factor makes a profit from collecting the money owed.

factor's lien | failure of consideration

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jack moving up in the world :)
i have a brother named jack, so whenever i see your name im marginally happier than normal
babycat
16:37
I'm guessing you don't have a sibling named babycat but I hope I still make you marginally happier than normal despite this
JumpySubsequentDolphin
16:38
maybe he has a babycat
babycat
16:38
I think everyone should have a babycat
JumpySubsequentDolphin
16:39
im allergic to baby cats >:(
JumpySubsequentDolphin
16:40
I used to have a babycat, I only got allergies after he died
JumpySubsequentDolphin
16:40
I think he’s haunting me
babycat
16:40
:(
babycat
16:40
that's too bad
babycat
16:40
you still have me though <3
@babycat: you make my day marginally happier with your scathing wit
16:43
New Father John Misty album out today
16:44
People saying it’s his best yet by far
babycat
16:45
what would I do without you renard99
awww ty wasp :)
i have 4 (baby) cats!
16:46
Damn you know her sarcasm is meant to be scathing when she calls me by my full username and not just Renard
JumpySubsequentDolphin
16:47
@jackfrost11770: FOUR?!??
16:48
I’m only teasing Babycat ily I’ll be seeing you in [REDACTED] very very soon
YES
and they're all rescues from breeders so they're all long haired persians .... w flat faces ....
they're all runts cause breeders just ... dispose of them (:(((() so they're all super tiny
literal babies
babycat
16:49
ily2 renard99
initiallaw
16:49
omg so cute
JumpySubsequentDolphin
16:51
@jackfrost11770: IM SO JEALOUS
2big2fail
16:52
perhaps peggerdine this evening
2big2fail
16:52
but then again, perhaps not
JumpySubsequentDolphin
16:53
damn no ucla wave
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