Factoring makes it possible for a loan to be increased as sales and receivables grow.

Question

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Factoring is a type of financing that involves selling accounts receivable (i.e. outstanding invoices) to a third-party financial institution (i.e. a factor) at a discount in exchange for immediate cash. As sales and receivables increase, the amount of cash available through factoring also increases, allowing for the possibility of an increased loan amount.

Factoring Makes It Possible for a Loan to Be Increased