Accounts receivable factoring (also called accounts receivable financing) is a financial transaction and a type of debtor finance in which a business sells its accounts receivables to a third party (called a factor) at a discount. A business will consider factoring accounts receivable to meet its present and immediate cash needs. Factoring is not the same as invoice discounting. Factoring is the assignment of the receivable, whereas invoice discounting is a borrowing that involves the use of the accounts receivable as collateral for the loan. Factoring requires a notification to your customer of the assignment while invoice discounting does not. Funding can take as little as 24 hours up to a couple weeks, the discount rates are usually between 1% and 3% for 30 (depending on the facility size) and advance rates from 70% to 98% (depending on industry). The lender will ask for aging reports (if available), customer address list, sample of an invoice which includes a copy of the contract, purchase/work order, proof of delivery/service.