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I always associated factoring with paying someone to handle Accounts Payable at a big company (which is your customer) with an Accounts Payable dept that is difficult to deal with for a small business (that don't have Accounts Receivable). These factoring companies are handed invoices for services rendered and when they collect they give you ~96%.

This is different because Shopify is the storefront/ payment processor, they can collect money when the product is bought; they don't have to negotiate with sophisticated people on when the payment can be made. Shopify is fronting the capital before it's even been collected, where this is not the case in the typical factoring company's business.