Factoring use

When any small business resorts to factoring receivables it's because it is extremely under-capitalized and can't get traditional bank financing. Using factoring is perhaps the most expensive form of financing and is almost always an act of desperation.

Whether you should consider factoring to acquire working capital depends upon whether you have any other choices, such as traditional financing terms from a bank. If not, factoring may be your best option. But remember, factoring is likely a last resort step for a sick business that is about to fail.

It is a wake up call that fundamental changes must be made in order for the business to survive long-term

Search again for factoring definition.