What is the difference between invoice financing and invoice factoring?

Invoice financing an umbrella term encompassing both invoice finance and invoice factoring. It refers to the practice of a business obtaining a loan by using its outstanding invoices as collateral.

A notable feature of invoice financing is its confidentiality; typically, the company's customers are unaware of the arrangement, as the business continues to manage its invoices.

Conversely, invoice factoring involves a business selling its sales ledger to a third-party lender, known as the factor. Here, the factor takes on the responsibility of collecting unpaid invoices. Unlike invoice financing, invoice factoring is not confidential, and it's common for the company's customers to be aware of the factor's involvement in collecting their dues.

This fundamental difference in who handles the receivables collection shapes the choice between invoice financing and factoring for businesses seeking to manage their cash flow effectively

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