Why would a company sell receivables to another company?

A company sells accounts receivable, which is a transaction in which the business decides to sell or compromise its invoices. The reason is that they represent money owed by their clients and they are used as collateral by a financial company. In this way, the factor will discount the value of the accounts receivable will provide the business residual amounts. These amounts will depend on the age of the invoices; the older they are, the smaller the money advance will be.