Commercial factoring is a financing and risk management solution, essentially a financial service consisting of factoring contracts signed between factoring firms and suppliers. This service includes financing, credit risk management, accounts receivable management, and debt collection services. The basic principle of commercial factoring is that the factoring company signs a contract to acquire the accounts receivable of the enterprise and prepay the funds, in order to achieve the flow and optimization of the enterprise's funds. The purchaser signs a contract with a commercial factoring company to directly pay the accounts payable to the factoring company, which then pays the prepaid funds to the supplier.

Commercial factoring can be classified based on multiple aspects. In terms of recourse, commercial factoring can be divided into two types: with recourse and without recourse. In terms of whether to notify the debtor of the transfer of accounts receivable, commercial factoring can be divided into explicit factoring and implicit factoring. In terms of the number of factors involved, commercial factoring can be divided into single factoring and double factoring. In terms of initiating factoring business, commercial factoring is divided into buyer factoring and seller factoring. In terms of confirming the ownership of core enterprises, commercial factoring can be divided into forward factoring and reverse factoring. In terms of international factoring, commercial factoring can be divided into domestic factoring and international factoring. In terms of providing factoring services to import/export enterprises, commercial factoring is divided into import factoring and export factoring. In terms of payment paths, commercial factoring can be divided into direct payment factoring and indirect payment factoring.
In the practical application of commercial factoring, reverse factoring and international factoring are widely used. In contrast, they require a simpler process, shorter processing time, and can be completed through online transactions. Factoring services are clearly becoming increasingly popular and applied in multiple fields worldwide, helping companies to manage their cash flow and risk more efficiently.