![]() Unlike a traditional business line of credit, your credit limit amounts can depend on your outstanding invoices. Since you’re not selling your invoices, you’re responsible for collecting payments from your clients. However, instead of selling an invoice to a factor, you use your invoices as collateral for a short-term business loan or a line of credit. Invoice financing, sometimes called invoice discounting, is similar to factoring because it also relies on your invoices. What is the difference between financing and factoring? There are also some factors that offer spot factoring, which gives you the flexibility to choose which invoices you want to factor. For example, factoring companies might require you to factor every invoice you receive - even if you don’t need the extra cash right now - or charge a fee if you don’t factor a minimum amount of dollars in a month. The factor will also be responsible for collecting payments from your client, which might include following up to inquire about unpaid invoices. With non-notification factoring, the factor might use an email address and branding to make it look like messages are coming from your company. In either case, the factor will be responsible for collecting payment from your client, which might include following up to inquire about unpaid invoices. With non-notification factoring agreements, you can keep the arrangement private.
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