Debtor Finance

Glossary

Banking

Debtor Finance

Debtor financing is a popular borrowing method used by typically small and medium-sized companies to improve working capital. Companies sell invoices at a discount to face value to invoice discounters. By doing so, companies recognise immediate payment of invoices. Factoring is one variety of debtor financing. Financiers will typically offer clients revolving facilities where companies borrow when they need by delivering invoices in batches to lenders; credit limits are maintained as invoices are settled in favour of lenders.

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