Invoice Factoring
Turn Unpaid Invoices Into Immediate Cash Flow
What is Invoice Factoring?
Invoice factoring (also called accounts receivable financing) is a financing solution that allows you to sell your unpaid customer invoices up to $25M in exchange for immediate cash. Instead of waiting 30, 60, or 90 days for your customers to pay, you get funded within 24-48 hours, giving you the working capital you need to run and grow your business today. Unlike a loan, invoice factoring is not debt, it's a sale of your accounts receivable. This means no monthly payments, no impact to your debt-to-equity ratio, and no collateral beyond the invoices themselves. Factoring provides immediate liquidity while the factoring company handles collections, allowing you to focus on running your business instead of chasing payments.
Industries That Benefit from Invoice Factoring?
Staffing & Recruiting Agencies, Transportation & Trucking, Manufacturing, Wholesale & Distribution, Business Services, Healthcare Services, Government Contractors, Construction & Contractors, Oil & Gas Services.
Why Choose invoice factoring?
Immediate Cash Flow
Get 80-95% of your invoice value within 24-48 hours instead of waiting 30-90 days. Eliminate cash flow gaps and keep your business running smoothly.
No Debt Added
Factoring is a sale, not a loan. It doesn't appear as debt on your balance sheet and doesn't impact your ability to secure other financing.
Easy Qualification
Approval based on your customers' creditworthiness, not yours. Startups and businesses with challenged credit can qualify if they have creditworthy clients.
Outsourced Collections
The factoring company handles all collection efforts professionally. Free up your time and resources while ensuring invoices get paid.
Flexible Funding
Funding grows with your business. The more invoices you generate, the more working capital you can access—with no fixed limits.
Fast Setup
Get approved and start factoring within days, not weeks. No lengthy applications or extensive documentation required.
FAQs:
How does invoice factoring work?
Invoice your customer – Deliver goods/services and send an invoice with standard terms (NET 30/60/90).
Submit for factoring – Send the invoice to the factoring company for verification and funding.
Get an advance – Receive 80-95% of the invoice value in 24-48 hours.
Factor collects payment – The factoring company notifies your customer and manages collections.
Customer pays factor – Your customer pays the factoring company per the original terms.
Receive final balance – You get the remaining 5-20%, minus a 1-5% factoring fee.
Will my customers know I'm factoring invoices?
Yes. The factoring company sends a "Notice of Assignment" to your customers informing them that payments should be sent to the factor instead of you. This is standard practice and most customers are familiar with factoring.
How much of my invoice will I receive upfront?
Most factors advance 80-95% of the invoice face value immediately. The exact percentage depends on your industry, customer creditworthiness, and the factor's policies. Trucking/freight companies often get 95%+, while other industries typically receive 80-90%. The remaining balance (minus fees) is released after your customer pays.
Can I choose which invoices to factor?
It depends on your agreement. Some factors offer "spot factoring" where you can select specific invoices to factor as needed. Others require you to factor all invoices from a specific customer once you start factoring them ("whole ledger factoring"). Spot factoring offers flexibility but usually comes with higher fees.
What if my customer doesn't pay the invoice?
With recourse factoring (most common), you must buy back the unpaid invoice or replace it with another invoice. With non-recourse factoring, the factor absorbs the loss if non-payment is due to customer bankruptcy or credit insolvency—but you're still responsible for disputes about the goods/services you delivered.
Do I need good credit to qualify for invoice factoring?
No! This is one of factoring's biggest advantages. Approval is based primarily on your CUSTOMERS' creditworthiness, not yours. Startups, businesses with challenged credit, or those who've been denied bank loans can often qualify for factoring if they have creditworthy clients who pay reliably.
Are there long-term contracts required?
It varies by factor. Some require 6-12 month contracts, while others offer month-to-month agreements with no long-term commitment. Factors with contract requirements typically offer lower fees. Always read the contract carefully and understand any early termination fees before signing.
Can I factor invoices to government agencies?
Yes! Government invoice factoring is very common, especially for federal government contractors. Government agencies are considered very creditworthy. However, government invoices often take longer to pay (60-90+ days), which may result in slightly higher factoring fees. Specialized government contract factoring companies exist for this purpose.
What's the minimum amount I need to factor?
Most factoring companies have monthly minimums ranging from $10,000 to $50,000 in total invoiced amount. Some factors specialize in small businesses and have lower minimums or no minimums at all (though fees may be higher). Individual invoice minimums typically range from $500 to $1,000.