Final answer:
Factoring involves the sale of individual receivables, while securitization involves the sale of a pool of receivables as securities.
Step-by-step explanation:
In the context of finance, the sale of a receivable using factoring is a process where a company sells its accounts receivable to a financial institution or a factoring company at a discounted price, in exchange for immediate cash. The factoring company assumes the risk of collecting the receivables from the customers.
On the other hand, securitization is a process where financial institutions pool a group of receivables, such as mortgages or car loans, and sell them as securities in the capital markets. These securities are backed by the future cash flows from the underlying pool of receivables.
The main difference between factoring and securitization is that factoring involves the sale of individual receivables, while securitization involves the sale of a pool of receivables as securities.