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Factoring may be briefly defined as a financial service based on the provision of finance to a business unit in exchange for outstanding invoices. The service is provided by specialised institutions, called factors, and make it teenslikeitbig possible for business to avoid bad debts and improve their cash flow, The idea of factoring began to develop in the 1960s but orginally it was considered to be a form of lending in the last resort which slowed down its development. The basic principle of factoring is the sale of outstanding invoices by a company to a factor. The factor discounts the invoice, he buys it for less that its face value and in due time collexts the teenslikeitbig debt from the debtor to whom the invoice was made out.There are four basic forms of factoring which may be vary from the basic pattern.

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