Invoice factoring

Selling a business's unpaid invoices to a third party at a discount for cash now, so it gets paid immediately instead of waiting out net-30 or net-60 terms; common in staffing, distribution, and other receivables-heavy trades.

It is expensive money, but for a business that funds weeks of payroll or inventory before it collects, it can be the difference between growing and running out of cash; find out whether the target relies on it and at what cost before trusting its margins.

In numbers: A staffing agency factoring $500k of receivables at a 2% fee pays $10k to be paid weeks early; on thin temporary-staffing margins that fee is a real slice of the profit, which is why the factoring cost belongs in the earnings you underwrite.