What is the primary purpose of debt factoring?

The primary purpose of debt factoring is to process invoices and secure loans based on those invoices. This financial practice allows businesses, particularly small to medium-sized enterprises, to improve cash flow by selling their accounts receivable at a discount to a factoring company. This enables them to receive immediate cash, which can be crucial for operations, covering expenses, or investing in growth opportunities without waiting for customers to pay their invoices. By utilizing debt factoring, businesses can better manage their finances and ensure they have the liquidity needed to meet immediate obligations.

The other options do not relate to the concept of debt factoring. Selling products directly to consumers is focused on sales and marketing, asset depreciation involves accounting for the gradual loss of value of assets, and managing personal savings pertains to individual financial planning rather than business cash flow strategies.