Invoice factoring is when you sell an unpaid invoice to a third-party company for a percentage of its value (typically 80-95%) in exchange for getting paid immediately instead of waiting 30, 60, or 90 days for the client to pay. The factoring company then collects the full amount from your client and keeps the difference as their fee.
It can make sense if you have a real cash-flow gap, payroll due, a big expense, an opportunity that requires capital now, and the invoice is from a reliable client who will definitely pay eventually. It's generally not worth it as a routine way to get paid faster, since factoring fees (often 1-5% per month the invoice is outstanding) add up fast and eat into already-thin freelance margins.
Before considering factoring, it's worth trying cheaper options first: a stronger late fee clause in future contracts, requesting a deposit upfront, or simply sending a firmer payment reminder. Factoring is a real tool but it's expensive money, treat it as a last resort, not a routine cash-flow strategy.