Factoring offers companies the opportunity to sell their receivables from goods delivered or services rendered to a factoring company. The factoring company pays out a large portion of the outstanding invoice amount. This is particularly advantageous when companies grant their customers long payment terms or wish to finance their growth without taking out additional loans. Factoring can be used in many sectors—such as the service industry, manufacturing, or the construction industry.

Factoring agreements also offer a great deal of flexibility in terms of customization. Depending on the terms of the agreement, the factoring company may take on additional tasks such as accounts receivable management or dunning and collections. In addition to purchasing the entire receivables portfolio, other options such as maturity factoring or selective factoring are also available.