A factor is a finance company or bank that buys receivables from businesses and then collects the payments directly from the customers. Factoring is a multibillion dollar business.

Factoring arrangements vary widely. Typically the factor charges a commission to the company that is selling the receivables. This fee ranges from 1-2% of the amount of receivables purchased.

Webster Dictionary Meaning

1. Factor
- One who transacts business for another; an agent; a substitute; especially, a mercantile agent who buys and sells goods and transacts business for others in commission; a commission merchant or consignee. He may be a home factor or a foreign factor. He may buy and sell in his own name, and he is intrusted with the possession and control of the goods; and in these respects he differs from a broker.
- A steward or bailiff of an estate.
- One of the elements or quantities which, when multiplied together, from a product.
- One of the elements, circumstances, or influences which contribute to produce a result; a constituent.
2. Factor
- To resolve (a quantity) into its factors.
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