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Factoring is the sale of a company's accounts receivable to gain working capital. There are various types of factoring, but the tutorial focuses on non-recourse full notification factoring, where account debtors (the client's customers) are informed to pay directly to the factor instead of the supplier. The factor assumes the credit risk, providing clients with a form of credit insurance against customer non-payment. The speaker has a background in SBA lending, making them familiar with lending terminology. They note that those more accustomed to loans may find a comparable term in the factoring world to be a "factoring facility."