Factoring
Factoring
What is Factoring?
Factoring allows businesses to access immediate cash by selling their invoices at a discount to a funding institution, also known as a factor. This strategy is often used to ease cash flow challenges by converting accounts receivable into quick funds during times of uncertainty or financial need.
Factoring is not a loan or a liability; it involves the sale of an asset—in this case, the invoice itself.
How factoring typically works?
- The holder of the Factoring Licence (the factor) buys the right to request payment on the invoice from a business (client).
- The factor pays up to 90% of the value of the invoice to the client.
- The remaining amount is kept in a reserve account.
- The factor collects payment - the face value of the invoice from the person named in the invoice.
- The factor releases the amount in the reserve account to the client less the factoring charges.
Apply for a Factoring Licence in Mauritius with Aacapital
AAcapital offers expert guidance to help you successfully apply for a Factoring Licence in Mauritius. Our experienced team will navigate the regulatory requirements, ensuring a smooth and efficient licensing process.
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