Invoice Factoring Explained
Turn unpaid invoices into immediate cash for your business
24-48hrs
Get Paid
80-95%
Advance Rate
No Min
Credit Score
How Invoice Factoring Works
1
You Complete Work
Provide services or deliver goods to your customer
$100,000 invoice
2
Submit Invoice to Factor
Send invoice to factoring company for immediate funding
3
Receive Advance
Get 80-95% of invoice value within 24-48 hours
$90,000 advance
4
Customer Pays Factor
Your customer pays the factoring company directly in 30-90 days
5
Receive Remaining Balance
Get the remaining 5-20% minus the factoring fee
$7,000 balance
Pros & Cons of Invoice Factoring
Advantages
- ✓Get paid immediately instead of waiting 30-90 days
- ✓No debt on your balance sheet (it's a sale, not a loan)
- ✓Based on customer credit, not yours
- ✓Frees up cash flow for operations and growth
- ✓No monthly payments to worry about
- ✓Can factor individual invoices as needed
- ✓Factoring company handles collections
Disadvantages
- ⚠More expensive than traditional loans (1-5% per invoice)
- ⚠Customer knows you're factoring (notification required)
- ⚠May require minimum monthly volume
- ⚠Not all customers qualify (depends on their creditworthiness)
- ⚠Factor controls collection process
- ⚠Long-term contracts with some companies
- ⚠Can affect customer relationships
Best Industries for Factoring
🚛
Trucking & Logistics
Long payment terms (30-90 days)
👥
Staffing Agencies
Weekly payroll with monthly invoices
🏭
Manufacturing
Large orders with delayed payment
📦
Wholesale/Distribution
High volume, thin margins
🏗️
Construction
Net-60 or Net-90 payment terms
🏛️
Government Contractors
Slow government payment cycles
Understanding Factoring Costs
Invoice Amount
$100,000
Advance Rate
90%
Immediate Advance (90%)$90,000
Reserve (10%)$10,000
Factoring Fee (3%)-$3,000
Final Amount Received$97,000
Total Cost: $3,000 (3% of invoice) to get paid 60 days early
Get Paid on Your Invoices Today
Turn your outstanding invoices into immediate working capital
Start Factoring Invoices →