What is factoring?

The cuts of recent years mean that it has become increasingly difficult for pharmacy owners to find the cash to invest in their business. Could factoring be a solution? 

Factoring is a financial transaction in which a business raises ready cash by selling its invoices to an agent, or factor, at a discount. This means that the business is paid immediately rather than possibly facing a long wait for payment or having to spend time chasing the invoices. The factor benefits by charging a fee for the service, or a percentage of the total invoice value – typically 1% to 2%. The process is also sometimes referred to as “invoice discounting” or “receivables finance”.