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Is it possible to have a credit line without being listed on the balance sheet as a debt? If a business has invoices, can it draw against the invoices before they are actually collected? Is there a third party that will manage accounts receivable and advance money for those accounts? If a business is unable to obtain a loan or credit line due to less than perfect credit, is there a financial alternative to finance payroll, overhead expenses, rent and business operations? Is there a source of money to finance net-30 without being choked with negative cash flow? Is there a way a business can increase and maintain an off-balance-sheet line of credit that will grow as the business grows?

When a business delivers products and / or services, and an invoice is created, the invoice becomes an asset. A business can draw money by factoring the invoice. Factoring is a third party funding source willing to step in and finance accounts receivable. A factor is willing to pay an advance against the invoice followed by the remainder amount of the invoice minus a discount.

This process is similar to the way a business receives money for a credit card invoice except factoring involves a second installment as compared to only one installment for payment of credit card invoices. Every time a credit card is being used, the process involves using the basic principles of factoring.

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Factoring or invoice financing is not entered on the balance sheet as a debt because it is not a debt but rather the sale of an asset. When a factor advances money against an invoice, he is buying the invoice and taking over the management of that account until it has been paid. Once the client owing on the invoice pays the factor, the factor pays the reserve amount minus a discount.

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