The above process is called receivables or invoice financing. There are many other terms for them, but in its most fundamental; are made available to an incoming claim or invoice. Factoring is common in the construction industry due to long payment cycles, which can extend up to 120 days and beyond. However, the construction industry has risky features for factoring companies. Due to the risks and exposure of mechanics` instructions, the risk of „paid“ conditions, the existence of progress notes, the use of deductions and exposure to business cycles, most „general“ factoring companies avoid construction requirements altogether. This has created another niche of factoring companies specializing in construction requirements.  When a company decides to charge claims to a policy or broker factor, it must understand the risks and rewards associated with factoring. The level of financing may vary depending on the specific receivables, debtors and industry in which factoring occurs. Factors may limit and limit financing in cases where the debtor is considered non-solvent or where the amount of the bill represents too large a share of the company`s annual income. Another problem is the calculation of billing costs. It is a marriage of an administrative tax and interest earned overtime, as the debtor takes the time to repay the original bill. Not all factoring companies receive interest on the time it takes to cash in by a debtor, in which case administrative costs are sufficient, although this type of facility is relatively rare.
There are large sectors that stand out in the factoring industry that are: there are three parties directly involved: the factor that buys the debt, the one who sells the debt and the debtor who has financial responsibility that requires him to pay the owner of the bill.   The claim that is normally linked to an invoice for goods exported or sold is essentially a financial asset that gives the owner of the debt the right to recover money from the debtor whose financial liabilities directly correspond to the property of the debt.   The seller sells the receivables with a discount to the third party, the specialized financial body (also known as the postman).    This process is sometimes used in manufacturing when immediate needs for raw materials go beyond available money and „invoice“ purchasing capacity.  Both billing rebates and factoring are used by B2B companies to ensure they have the immediate cash flow necessary to meet their current and immediate commitments.  Accounting factoring is not a relevant financing option for individuals or B2C companies, as they generally do not have commercial or commercial customers, a necessary condition for factoring.