Ideas in this flowchart

• Factoring is a short-term financing method for businesses, including appliance industries.
• A company sells its invoices to a third-party funding source in exchange for cash.
• The factor collects the invoice payments when they become due.
• Factoring suits businesses with steady orders but insufficient cash for payroll or other immediate payments.
• The arrangement provides financing for immediate business obligations.
• Factoring is more expensive than a bank loan.
• The higher cost occurs because the factor purchases receivables at a discount from their actual value.
• Factoring is a popular financing option for businesses needing accessible short-term cash.
• Trucking companies with large accounts receivable from freight bills are good candidates for factoring.
• The use of factoring raises the question of why firms choose it instead of loans.