Invoice Factoring In order to meet the immediate cash requirements of a business, a merchant might decide to sell all the accounts receivables to a third party, known as factor, at a discounted price. This type of debtor finance is known as Invoice Factoring. In this financing scheme, the borrower avails a loan by providing the invoices of his or her business as collateral in order to receive liquid cash. If the invoices are paid in full by the borrower, the lender will remit a percentage of the invoice amount to the business and the borrower will only have to repay a fee or interest for the service. In this type of Invoice Financing, the lender collects the payments from the customers of the business. Due to this reason, this type of financial scheme might reflect poorly on the business. Therefore, businesses can use Invoice Discounting as an alternate to receive financial aid through Accounts Receivables Financing.