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Invoice Factoring

Power Your Business Past Payment Delays
Slow customer payments and extended terms shouldn’t hold your business back. Invoice factoring provides fast funding, helping you overcome financial disruptions and stay on track.
Get Paid Without the Wait

Business invoice factoring offers a straightforward solution to payment delays: turning unpaid invoices into immediate working capital so you don’t have to wait.

The U.S. invoice factoring market recently reached $171.98 billion, reflecting its growing role in helping businesses maintain cash flow.

However, factoring isn’t just for struggling businesses. Companies of all sizes, from startups to large enterprises, use invoice factoring services to unlock cash from outstanding invoices and maintain smooth operations.

Concerned about client relationships? Most customers recognize factoring as a standard financial practice. Beyond funding, many factoring companies also handle invoicing and collections, giving you more time to focus on your operations.

Read on to learn how to access cash in as little as 24 to 72 hours and stay ahead with smart invoice factoring solutions.

How Invoice Factoring Works

Get the Funds You Need, When You Need Them

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Here's how it works:

  • Submit Invoice

    Send a copy of the invoice to the factoring company after billing the client. The factor reviews the submission and begins processing the request.

  • Invoice Verification and Credit Checks

    The factoring company verifies the invoice and evaluates the client’s credit history. Verifying payment reliability helps minimize the risk of non-payment.

  • Advance Payment and Reserve

    You will receive an upfront advance, typically covering 70%-96% of the invoice value. The remaining balance is held in reserve until the client completes payment.

  • Final Payout

    The factoring company releases the remaining balance once the client pays the invoice in full. The final payment is issued after deducting the factoring fee and any applicable charges.

Costs and Fees

Understanding the Price of Business Funding

Whether you need immediate liquidity or long-term capital, various funding options are available. Factoring is often weighed against traditional bank loans, lines of credit, asset-based lending, and revenue-based financing, each with its own cost structure and risk factors.

Before we explore factoring in detail, let’s look at this side-by-side comparison of its costs versus other financing methods.

Financing Option
Typical Rates
Key Factors Involved
Invoice Factoring
1% to 5% per month
Industry, risk, transaction specifics
Bank Loans
Starting at 7%
Business financials, lender, loan type
Line of Credit
Starting at 8% up to 60%
Lender terms, borrower creditworthiness
Asset-Based Lending
5% to 15%
Type and value of collateral
Revenue-Based Lending
1.3x to 3x repayment multiplier
Revenue consistency, lender terms

How Factoring Fees Are Structured

When discussing costs and fees, it’s also worth noting that factoring agreements vary in how fees are applied. Two common pricing structures are a monthly fee model and a weekly fee model.

Here’s a look at how these structures impact the total factoring expense.

Example 1 Monthly Fee Model

Consider this: you factor a $100,000 invoice with an 85% advance rate, receiving $85,000 upfront while $15,000 is held in reserve.

The factor charges a 3% monthly fee ($3,000) and a one-time $200 due diligence fee. Fees are charged at the start of each month, so if the invoice is paid after five weeks, you still owe $6,000 in fees, making shorter-term financing more expensive.

Example 2 Weekly Fee Model

Now, imagine factoring the same $100,000 invoice with an 85% advance rate. However, instead of a fixed monthly charge, you pay 0.75% per week ($750).

The reserve stays at $15,000. Fees accumulate weekly, so if the invoice is paid in five weeks, the total cost is $3,750, which is lower than the monthly model. However, if payment takes longer, costs can add up over time.

Hidden Fees and How to Avoid Them

As you compare invoice factoring proposals, it’s essential to look beyond the discount rate. Many factoring agreements include these hidden costs that may seem small but can significantly impact your profits over time.

  • Monthly Minimums or Other Minimum Factoring Requirements

    Some factoring companies require you to factor a minimum amount of monthly invoices. Falling short of this threshold can result in penalty fees.

  • Add-on or Administrative Fees

    Extra charges like processing fees, credit checks, and wire transfer fees can quickly accumulate, increasing the total cost of factoring.

  • Long-Term Contracts

    Some factoring agreements include long-term commitments, and early termination may incur costly penalties.

Practical Tips to Avoid Hidden Fees

To prevent unnecessary costs and get the most value from factoring, consider these strategies: 

  • Clarify All Fees Upfront

    Request a detailed breakdown of all potential fees, including administrative charges, credit check charges, and any penalties for early termination.

  • Choose a Reputable Invoice Factoring Service

    Work with a factoring company with transparent pricing, positive reviews, and a track record of fair business practices.

  • Monitor Invoice Processing and Payment Application

    Even after signing an agreement, it’s best to stay vigilant about how the factoring company processes invoices and applies payments to avoid unnecessary costs due to delays or mismanagement.
Get transparent factoring

Why Your Business Needs Factoring 

Let’s Turn Your Outstanding Receivables Into Immediate Growth

If your business relies on creditworthy clients but struggles with slow payments, invoice factoring services give you the working capital to cover expenses, meet payroll, and keep operations running smoothly.

Factoring isn’t a last resort option; it’s a smart way to keep cash flow strong. Instead of waiting weeks or months for payments, you get immediate capital to invest in growth or take on new projects without adding debt.

Best of all, factoring scales with you as your sales grow. The more receivables you have, the more funding you can access, helping you expand without being held back by unpaid invoices.

Don’t let your business slow down just because customers take their time paying. Leverage our invoice factoring service and focus on growth — not waiting.

Unlock Your Cash Flow Now

Industries that Benefit from Factoring

Solving Cash Flow Challenges Across Multiple Sectors

Here’s how invoice factoring solutions help businesses across these industries overcome cash flow challenges and remain financially stable.

Construction & Contractors

Construction firms, subcontractors, and suppliers often experience delayed payments tied to contract milestones, causing financial strain. At the same time, they must purchase materials, pay workers, and cover project expenses upfront. Invoice factoring helps bridge this gap by turning unpaid invoices into immediate working capital. This enables construction businesses to maintain steady cash flow, stay on schedule, and take on more projects without being limited by slow-paying clients.

Healthcare & Medical

Medical providers face some of the most extended payment delays, often waiting 60 to 120 days for insurance reimbursements. In the meantime, they must cover payroll, maintain facilities, and purchase medical supplies without interruption. Factoring speeds up cash flow by turning outstanding invoices into immediate working capital, allowing healthcare businesses to stay financially strong. Whether it’s hospitals, clinics, medical suppliers, or labs, factoring ensures continued operations without financial strain.

Agriculture and Food Production

Seasonal cash flow fluctuations can create financial strain, especially with high upfront costs for seeds, fertilizers, and equipment. With business invoice factoring, farmers receive steady working capital to keep operations stable even during off-peak seasons.

Telecom Financing

Don’t lose sales because of poor cash flow management. Fund your business growth with commercial factoring solutions you can depend on. Whether you specialize in fiber optics, utilities, telecom, or construction, Business Factors & Finance is your financing partner. Expect a 48-72 (business) hour turnaround for new accounts and 24 hours for established accounts.

Staffing, Labor & Payroll

Finding ways to cover payroll while waiting for clients to pay their invoices is frequently a big struggle in the staffing industry. Our invoice factoring company allows you to easily secure the funding you need for payroll, office supplies, payroll taxes and more. No long-term contracts or hidden fees. We offer high advance rates of up to 97% of open accounts receivable with flexible terms.

Seafood Factoring

Emergency ship and boat repairs, permits, maintenance, taxes, licensing, and crew paydays can’t afford to wait for uncertain checks in the mail – and neither can you. Our commercial factoring company offers a remarkably quick invoice funding turnaround, so you never have to wonder how you’ll fund your next shipment. Obtain up to 96% of your invoice principal amount in as little as 24 to 48 hours.

Payroll Funding

Whether you're an established enterprise or a fledgling startup, irregular staff payments can drive your team away. Business factoring provides the capital you need to cover payroll expenses without delay. We offer a 24 to 48-hour turnaround for last-minute funding requests on unpaid invoices (U.S. and Canada) and 3-4 business days for more complicated funding needs.

Oil & Gas Financing

Whether you operate upstream, midstream, or downstream, our invoice factoring company helps you maintain a stable source of capital without incurring debt. There is no limit to the amount you can fund with our factoring business solutions. After credit approval, submit your oil and gas receivables and get up to 96% of their value within 48-72 hours.

Manufacturing Financing

Get your products to your customers without waiting weeks or months to receive payment. Our commercial factoring company offers up to 92% advance rates without the prolonged application process associated with banks. Apply for factoring business solutions today, get approved, and keep your manufacturing business operating at full steam.

Government Contract Financing

Get your invoices paid in days, not months! With dependable business factoring solutions, you can eliminate the often lengthy payment cycles associated with government contracts. We complete your funding request within 24 to 48 hours and offer up to 93% advance rates, giving your business a more predictable cash flow and ensuring it stays financially healthy.

Fashion & Apparel Financing

With slim margins and slow payment timelines, business factoring is a must to ensure you fulfill orders on time and meet the demands that each season brings. We offer flexible business factoring solutions to help you secure the funds you need today. Apply for commercial factoring now and get funded in as little as 24 to 72 hours after approval.

Freight Bill & Trucking Factoring

Easily manage your cash flow and cover expenses such as insurance, fuel, maintenance, and payroll without crediting debt for your business. Whether you’re an owner-operator or a larger fleet, our business factoring solutions ensure fast, easy business cash advance of up to 98% of your freight bills and work tickets.

Technology/IT Financing

Many technology companies experience a cash flow gap because of Net 30/60/90. Get business funding anytime you need it on short notice and pay outstanding invoices ahead of lengthy net terms. No bank hassles and no debt or dilution. Our invoice factoring company provides the financial stability the IT industry demands. 

Which Model Fits Your Business Needs?

Both recourse and non-recourse factoring provide fast access to funds, but they differ in cost, liability, and approval requirements.

Recourse Factoring

Non-Recourse Factoring

Recourse factoring is the most common type of invoice factoring. In this arrangement, you receive immediate cash for your invoices but remain responsible for any unpaid debts.

Benefits of Recourse Factoring

Some key advantages of recourse factoring include:

  • Factoring companies charge less since they take on less risk.
  • Businesses qualify more easily because the factor isn’t fully assuming the risk.
  • Businesses typically receive a higher percentage of the invoice value upfront.

Common Risks Associated With Recourse Factoring

Despite these benefits, recourse factoring also comes with risks that must be considered:

  • If a customer fails to pay, you must repurchase the invoice or replace it with another collectible one.
  • Your business remains responsible for customer creditworthiness.
  • Multiple defaulted invoices may lead to additional borrowing.
  • Handling repurchased invoices and chasing late payments can increase workload and operational costs.

Unlike recourse factoring, non-recourse factoring shifts the burden of collection to the factoring company. If a customer fails to pay, the factor absorbs the loss.

If you work with new or unpredictable clients, operate in industries with long payment cycles, or simply prefer to eliminate credit risk, non-recourse invoice factoring services may be a valuable solution. 

Benefits of Non-Recourse Factoring

Some key advantages of non-recourse factoring include:

  • The factoring company evaluates customer creditworthiness, reducing financial risk.
  • The factoring company takes on the risk of customer non-payment.
  • The invoice factoring service also handles collections, allowing you to focus on daily operations rather than chasing late payments.

Common Risks Associated With Non-Recourse Factoring

While non-recourse factoring minimizes financial risk, here are some challenges to consider:

  • Factors may impose stringent credit requirements for your customers, limiting eligible invoices.
  • Factoring fees may be higher to offset the increased risk.
  • Initial cash advances may be smaller than recourse factoring.

Get Started Here

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FAQs

  • Is invoice factoring a loan? 

    Invoice factoring is a financing method where you sell your invoices to a factoring company in exchange for immediate cash. Since you’re not borrowing money, there’s no debt to pay. 

  • What happens if an invoice remains unpaid?

    With non-recourse factoring, your business is not responsible if a customer fails to pay. The factoring company absorbs the loss. With recourse factoring, you may need to repurchase or replace the unpaid invoice with another.

  • Will my customers think my business is struggling if I factor? 

    No, invoice factoring is a common financial tool businesses of all sizes use to improve cash flow. Most customers recognize it as a standard practice and won’t see it as a sign of financial trouble.

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