The subject of this final paper is factoring and its role in the financing of business companies. A practical example explains the function of factoring. The paper elaborates the types of factoring as well as the functions of factoring such as financing, securing of payments (del credere risk), and management of receivables (providing services). Moreover, the paper demonstrates the calculation of factoring price and the types of financing in the factoring contracts. As any other business, factoring also has its advantages and disadvantages. Unlike domestic factoring, international factoring increases the number and range of factor services. International factoring is considered real factoring. It is possible that domestic factor takes del credere risk in international factoring, then political risk and the risk of exchange rate fluctuation. Considering the fact that factoring is financial business, there is a law that regulates the factoring business in the Republic of Croatia. This paper will specify what is necessary to issue the authorization to perform factoring jobs, who issues the authorization and other details important for performing factoring business in accordance with law.