Factoring inventory is a business process by which businesses sell their accounts receivable and/or inventory to a third-party lender or factoring company at a discounted rate. This type of financing helps companies generate cash quickly, since they don’t need to wait for customers to pay their invoices. It is an effective way to leverage existing assets and manage cash flow. With factoring inventory, businesses can take advantage of quick access to funding that allows them to expand operations, launch new product lines, or cover unexpected expenses.