This arrangement is an example of "factoring".
A factoring arrangement is an agreement between the organization and a factoring firm. The organization will factor, or move, their records receivable to the firm at a markdown for a quick loan. The level of loan depends not on your company's credit record, but rather on the financial record of your clients.
Factoring agreements enable your organization to get required financing without taking out a bank credit. It is something that you may not need or have the capacity to do.
