Invoice financing is a financial service where businesses obtain funds by selling their unpaid invoices to a third party. This practice allows companies to access working capital immediately, rather than waiting for customers to pay. The third party, often a factoring company or financial institution, advances a portion of the invoice value and collects the full amount from the customer upon maturity. It serves as a short-term lending solution to improve cash flow.
Context
In the digital asset realm, invoice financing is a sector where blockchain technology seeks to introduce greater transparency and efficiency. News reports sometimes cover platforms using smart contracts to automate and decentralize the process, potentially lowering costs and increasing access for small businesses. The application of decentralized finance to traditional financial instruments like invoices represents a growing area of innovation.
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