Invoice Factoring
Selling unpaid invoices to factor at discount to get immediate cash.
Formula
Cash Received = Invoice Value − Factor's Discount Fee
Real World
A small UK clothing supplier invoicing a major retailer like Next might sell a £50,000 invoice to a factoring company for £47,500, receiving cash within 24 hours instead of waiting 90 days.
Exam Focus
Clearly state the trade-off: immediate liquidity versus the discount cost — 'analyse' questions require both sides.
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