> For the complete documentation index, see [llms.txt](https://polytrade.gitbook.io/polytrade-gitbook/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://polytrade.gitbook.io/polytrade-gitbook/guides/polytrade-factoring-transaction.md).

# Polytrade Factoring Transaction

How does a Factoring Transaction work on PolyTrade?

Suppose John has a furniture manufacturing business. He supplies this furniture to IKEA.

So, let’s say in a month, John sells furniture worth $4,000. The credit period for this transaction is 3 Months. This means that at any point in time, approximately $12,000 ($4,000 X 3 Months) worth of John’s funds are stuck in IKEA sales.

![](https://1803173946-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2F5EVFTQkJ9omvrtGeygn1%2Fuploads%2FjS7Rw3A1DS2Q5o1nELgO%2F6.jpg?alt=media\&token=6d40e1e6-b1c0-4efb-88d4-55419aaf2b76)

This can lead to a cash crunch for John. So, he has an option to factor his invoice on Polytrade. This is what it would look like:

![](https://1803173946-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2F5EVFTQkJ9omvrtGeygn1%2Fuploads%2FjgCtfEiCAv4W6yRERAHC%2F7.jpg?alt=media\&token=6644878a-6d0d-4803-b4e7-129ee78b7c3f)

As soon as IKEA receives goods, John would sell his invoice on Polytrade. Polytrade would immediately release funds to John’s account.

{% hint style="info" %}
Polytrade would collect this invoice once it is due for payment after three months.
{% endhint %}

**Note**: Maximum time limit for processing a transaction on Polytrade is for new users and 24-48 hours for existing users. Banks or traditional financial institutions normally take 1 to 2 months to process a similar transaction.

The steps followed by Polytrade for invoice approval are as follows:

* Invoice submitted by the seller
* Offer made by Polytrade
* Seller’s company documentation submitted
* Seller’s KYC
* Seller’s Due Diligence
* Buyer’s Due Diligence
* Final offer made to the seller
* Advance fund paid to the seller
* Collection of invoice
* Trade is closed