Factoring is a type of invoice finance where your business can sell outstanding invoices to a third-party company, known as a "factor."
In exchange, the factor gives your business an immediate cash advance, typically between 70% to 90% of the invoice's total value. So, instead of waiting for your customers to pay, you get a good chunk of that money straight away.
The factor also takes on the role of collecting the money owed on those invoices from your customers. Once they succeed in collecting the full amount, they'll send you the remaining balance, minus their fees.