Factoring is a transaction in which an entity (usually MSME or small business) can sell its receivables (dues from customers) to another entity—a factor—such as an NBFC to fulfil immediate working capital or cash flow requirements that otherwise gets hampered due to payment delays. Thus the factor provides finance against the receivables, enabling availability of ready funds for an enterprise. Currently, a handful of NBFCs and banks are providing funding to MSMEs against receivables. Factoring Regulation (Amendment) Bill, 2020 has been cleared in both Houses of Parliament in the current session. This will enable nearly 9,000 NBFCs to participate in the factoring market instead of just seven now.