What is it called when a business can receive immediate cash for invoices issued through another company's debt collection?

The correct term for when a business can receive immediate cash for invoices issued through another company's debt collection is known as factoring. This financial arrangement allows businesses to sell their accounts receivable (invoices) to a third party, called a factor, at a discounted rate. This provides the business with immediate liquidity, which can be essential for maintaining cash flow, covering operational expenses, or investing in opportunities.

Factoring helps businesses to manage cash flow more effectively, especially if they have customers who take a long time to pay their invoices. By utilizing factoring, they can avoid disrupting their financial stability while waiting for those payments to arrive.

In contrast, other options like leasing involve acquiring the use of an asset without owning it, overdrafts allow businesses to borrow beyond their account balance temporarily, and short-term loans require repayment with interest over a fixed period, but none provide the immediate conversion of unpaid invoices into cash that factoring does. Thus, factoring is the most fitting term for the situation presented in the question.