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Factoring is a financial solution for business owners to obtain working capital needed to operate their businesses and ensure timely payments. For instance, a furniture maker ships 100 tables to a retailer and sends an invoice but faces a delay in payment, which could take 30 to 90 days. To address cash flow needs for purchasing raw materials and paying employees, a factoring company steps in. They verify the retailer's creditworthiness, track payment records, and handle payment collection, allowing the business owner to focus on production and operations without worrying about delayed invoices.