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At Business Factors & Finance, we understand how overdue invoices can stall operations for even the most well-managed companies. Recent research shows that nearly half of all B2B invoices in the U.S. go unpaid past their due date.
For many businesses, especially small- to medium-sized enterprises (SMEs), delayed invoices disrupt cash flow, making it difficult to pay vendors and staff on schedule. Over time, this pressure can lead to production setbacks, strained partnerships, missed growth opportunities, and a constant cycle of financial problems.
Rather than waiting up to three months for payment, accounts receivable (AR) factoring provides a smarter alternative. Instead of taking on more debt or dipping into reserves, you turn invoices into cash to keep your business moving.
Business Factors & Finance provides flexible, transparent invoice factoring services for accounts receivable to relieve cash flow stress and support sustainable growth. Contact us today to learn how we can help your company streamline its cash flow.
How Accounts Receivable Factoring Works
Turn Unpaid Invoices Into Working Capital — Fast
Here's how it works:
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Submit Your Invoices
Provide Business Factors & Finance with your unpaid customer invoices. Instead of waiting through 30-, 60-, or 90-day terms, you can convert those receivables into immediate funding by selling them to our accounts receivable factoring company.
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Invoice Verification and Credit Check
Once we receive the invoices, we verify them and review the customers’ creditworthiness. Since factoring approval is based on your customer’s ability to pay, this financing option is accessible even for newer businesses or those with limited credit history.
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Receive an Advance Payment
After verification, you receive an upfront advance, typically 70% to 90% of the invoice’s value. This gives your business the liquidity it needs to cover operational costs.
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Final Payout and Fees
Once your customer pays the invoice in full, we release the remaining balance, minus a small factoring fee. This final payout completes the transaction.
Costs and Fees
Compare Accounts Receivable Financing With Other Options
Factoring fees depend on your industry, volume of invoices, and customer risk. However, they’re often competitive with or even better than other financing methods. Here’s how accounts receivable factoring stacks up against common alternatives:
How Factoring Fees Are Structured
Choose the Model That Matches Your Cash Flow Cycle
Factoring AR companies typically charge fees in one of two ways: monthly or weekly. The right model for your business depends largely on how quickly your customers pay.
Example 1: Monthly Fee Model
A packaging supplier factors a $100,000 invoice with an 85% advance rate and receives $85,000 upfront. The factoring company charges a 3% monthly fee ($3,000) and a one-time $200 due diligence fee.
If the customer pays after five weeks, the total fee reaches $6,000. This model is best when your customers pay within the same calendar month.
Example 2: Weekly Fee Model
An industrial equipment distributor factors a $100,000 invoice with the same 85% advance rate but chooses a 0.75% weekly fee structure ($750/week).
If the customer pays in five weeks, the total fee is $3,750, less than the monthly model.
However, if payment takes longer, the cumulative fees will increase, making this model best suited for customers who don’t have a history of delaying payments for more than a few weeks.
Hidden Fees and How To Avoid Them
Accounts receivable factoring can pull your business out of a tight spot. However, not all providers are transparent about the true cost. Some factoring companies include hidden charges in their agreements, which can eat into your margins.
At Business Factors & Finance, we offer clear, upfront pricing with no unpleasant surprises down the line. When comparing providers, check for unclear terms, vague fee structures, and aggressive contracts that can undermine the benefits of factoring.
Here are some hidden fees to watch out for when evaluating the terms given by an account receivable factoring company:
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Monthly Minimums
Some companies require you to factor a minimum dollar amount each month. Falling short can result in penalty fees.
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Processing or Admin Charges
Fees for invoice verification, credit checks, and wire transfers might seem small, but they can add up and eat into your profits.
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Termination Fees
Long-term contracts may charge steep penalties if you exit the agreement early.
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Reserve Holdbacks
While reserves are standard, some providers delay returning unused reserve funds even after invoices are paid.
Why Your Business Needs Factoring
Stay Cash-Ready in an Invoice-Driven Economy
Slow customer payments can impact your entire operations, delaying growth by keeping you from leveraging opportunities and even damaging your reputation with vendors/suppliers, investors, customers, and staff.
Factoring receivables helps business owners sidestep the negative financial, operational, and reputational consequences of delayed invoices. Instead of worrying about where to get money for the next shipment of products or to pay your team, you can focus on other priorities, like innovation and business growth.
Factoring is especially helpful in industries with long net terms and seasonal shifts in demand, allowing you to convert unpaid invoices into working capital within days or even hours.
Whether you’re scaling operations or navigating a busy season, Business Factors & Finance helps keep your business funded and ready.
Industries That Benefit From Factoring
Where Accounts Receivable Funding Keeps Business Moving
From human resources to logistics, many industries rely on factoring to bridge the gap between invoicing and payment. Below are some examples of businesses that use accounts receivable financing:
Staffing Agencies
Manufacturing
Apparel
Government Contractors
Trucking and Freight
Information Technology (IT)
Which Model Fits Your Business Needs?
Both recourse and non-recourse factoring offer fast access to working capital, but the right model for your business depends on how much risk you're willing to carry if a customer doesn't pay.
Recourse Factoring
Non-Recourse Factoring
With recourse factoring, your business remains responsible if a customer fails to pay the invoice. The factoring company may require you to repurchase the unpaid invoice or replace it with another collectible one.
Benefits:
- Lower Fees: Since you take on the risk, recourse factoring usually costs less.
- Higher Advance Rates: You may receive a larger percentage of the invoice upfront.
- Easier Approval: Factoring companies are more flexible because their risk exposure is reduced.
Risks:
- You’re Liable for Nonpayment: If the customer defaults, the debt falls back on you.
- Credit Burden Remains: You must monitor and manage your clients’ payment reliability.
- Multiple Defaults Can Add Up: Replacing invoices or covering losses can strain your finances.
Non-recourse factoring shifts the risk to the factoring company. If your customer becomes insolvent or cannot pay due to bankruptcy, the factor absorbs the loss.
Benefits:
- No Liability for Unpaid Invoices: The factor handles collections and absorbs the risk of default.
- Protects Against Client Bankruptcy: This is especially useful when dealing with large retailers and government contracts.
- Saves Time: You won’t have to follow up with delinquent customers. The factoring company handles collection efforts.
Risks:
- Higher Fees: Because the factor takes on a lot of the risk, you’ll likely pay more.
- Lower Advance Rates: Some providers may offer slightly less upfront.
- Stricter Client Requirements: The factor may only accept invoices from customers with strong credit histories.
Get Paid Without the Wait
When your cash flow depends on slow-paying customers, your business carries all the risk. Accounts receivable factoring gives you the power to turn outstanding invoices into fast, flexible funding.
At Business Factors & Finance, we help business owners stay cash-ready with transparent, personalized factoring solutions. Whether you need capital for payroll, production, or growth, you can rely on us to make the process simple, fast, and free of hidden fees.
Discover how factoring receivables can help you avoid cash crunches and keep your business moving forward. Contact us today.
FAQs
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What types of businesses qualify for invoice factoring?
Accounts receivable factoring is available to a wide range of industries. Eligible companies include, but aren't limited to, staffing agencies, manufacturers, government contractors, IT providers, logistics firms, and apparel businesses. You likely qualify if your organization invoices other companies (B2B) or government entities and offers payment terms.
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How quickly can my business receive funding?
Once your application is approved, you can receive funding within 24 to 72 hours after submitting your invoices. First-time clients may experience a slightly longer onboarding period, but once your account is set up, funding is fast and repeatable for future invoices.
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Is accounts receivable lending the same as accounts receivable factoring?
No, accounts receivable lending and factoring are not the same, though both involve using unpaid invoices to access capital.
With accounts receivable lending, you use invoices as collateral to get a loan or line of credit. You are responsible for repaying accounts receivable loans.
With accounts receivable factoring, you sell your invoices for immediate funds. The factor collects the payment directly from your customers, and there is no loan to repay.