Stack of business invoices on an office desk with financial documents

$10K - $5M

Factoring

Invoice factoring is the sale of unpaid B2B or government invoices to a factoring company, which advances up to 90% of their value within 24 to 48 hours and pays the balance, less a fee of typically 1% to 5%, when your customer pays. It is not a loan, and approval leans on your customers' credit.

Written by Jordan Levy, Founder & CEO · Last updated November 4, 2026

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Factoring

$10K - $5M

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What is invoice factoring?

Invoice factoring converts your outstanding receivables into immediate cash. Instead of waiting 30, 60, or 90 days for customers to pay, you sell those invoices to a factoring company at a small discount and receive up to 90% of the invoice value within 24-48 hours. The factor then collects payment directly from your customers. This isn't a loan — it doesn't add debt to your balance sheet — and it scales naturally with your sales volume. The more you invoice, the more capital you can access.

Key Features

Advances up to 90% of invoice value
Funding within 24-48 hours
Your customers pay the factor directly
No long-term debt on your balance sheet

Funding Range

$10K - $5M

How does invoice factoring work?

Submit your invoices

Send us the outstanding invoices you want to factor. We review the invoices and verify that the customers (your account debtors) are creditworthy.

Receive an advance

Within 24-48 hours, you receive up to 90% of the total invoice value deposited directly into your business account.

The factor collects payment

The factoring company manages collection from your customers on the normal payment terms. You are free to focus on your business instead of chasing payments.

Receive the remaining balance

When your customer pays, you receive the remaining balance minus the factoring fee. The fee is typically 1-5% of the invoice value depending on volume and customer creditworthiness.

Why Choose This Product

Why use invoice factoring?

Immediate Cash Flow

Stop waiting on net-30, net-60, or net-90 terms. Convert invoices to cash within 24-48 hours.

Not a Loan

Factoring is an asset sale, not debt. It doesn't appear as a liability on your balance sheet.

Scales with Revenue

Your funding capacity grows with your sales volume. More invoices means more available capital.

Eligibility

Who qualifies for invoice factoring?

Minimum 600 credit score (above that, your customers' creditworthiness matters more than yours)
At least 1 year in business
At least $400,000 in annual revenue
Invoices must be to creditworthy B2B or B2G customers
Industries with B2B invoicing models are ideal — staffing, trucking, manufacturing, consulting, and more

Real-World Scenarios

How do businesses use invoice factoring?

A staffing agency invoices $300K monthly to corporate clients on net-60 terms. Factoring lets them access $270K within 48 hours to cover weekly payroll without waiting on payment cycles.

A manufacturing company receives a large purchase order but needs cash immediately for raw materials. They factor their existing outstanding invoices to fund the new order.

A trucking company factors its freight invoices to cover fuel, maintenance, and driver pay between loads, keeping cash flow steady across variable payment schedules.

Compare

How does invoice factoring compare to other options?

Factoring differs from AR financing in a key way: with factoring, you sell your invoices and the factor collects directly from your customers. With AR financing, you borrow against your receivables but retain ownership and collection responsibility. Compared to a line of credit, factoring does not add debt to your balance sheet and scales automatically with revenue, but it involves your customers interacting with a third party. A bridge loan may be a better fit if you need a one-time lump sum rather than ongoing receivables conversion.

Frequently Asked Questions

Common questions about Factoring

Your personal credit score is less important for factoring than for other products. The primary underwriting factor is the creditworthiness of your customers — the businesses that owe you money. The minimum is a 600 credit score; above that, strong customer credit carries more weight than your personal score.

Once your account is set up and invoices are verified, advances typically arrive within 24-48 hours. Initial setup usually takes 3-5 business days, but subsequent invoices are processed much faster.

You will need copies of the invoices to be factored, proof of delivery or service completion, your customer contact information, and standard business identification documents.

In most cases, yes. The factoring company sends a notice of assignment and collects payment directly. However, many businesses view this as standard practice, and reputable factors handle customer interactions professionally.

No. Factoring requires at least 1 year in business, $400,000 or more in annual revenue and a 600 credit score, along with verified invoices to creditworthy customers. If your business is younger, our credit repair program has no time-in-business minimum and can help get your credit ready for when you reach the 1-year mark.

The initial application typically uses a soft inquiry, which does not affect your score. Factoring is not a loan, so it does not appear as debt on your credit report.

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