Invoice factoring helps contractual partners reduce financial risks while keeping their relationships simple. If the buying party (A) requires a delay in making payment, the supplier (B) can still deliver on schedule and get paid right away through accounts receivable financing. In this case, a factoring company or bank (C) buys the unpaid invoice from the supplier at a discount. Party A then clears the invoice directly through party C within the allotted time period as agreed upon in their mutual contract.
However, the invoice factoring process may present several downsides, such as long acceptance periods (which only adds delays), pledges, limits, a complicated pricing system, and contract payables that factoring companies completely own. The founders of Finomancer came up with an idea for custom finance software that would make invoice factoring better and more cost-efficient for everyone involved.