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Turn Eligible Invoices Into Working Cash Flow

Completed the work but still waiting to be paid? Invoice factoring may convert eligible commercial receivables into cash before the customer’s due date.
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Submitting an inquiry does not guarantee approval or funding. Program availability, amounts, terms, costs, and timing depend on the applicant and funding provider. Expedited applications are generally reviewed within 24–48 hours; review time is not a funding guarantee.
Invoice factoring is generally a transaction in which a factor purchases eligible business-to-business or government receivables. The factor advances part of the invoice value, holds a reserve, and releases the remaining balance—less applicable fees—after the customer pays, subject to the agreement.

When factoring may fit

Factoring is often considered when the business is profitable on paper but cash is tied up in Net 30, Net 60, or Net 90 invoices. It can be useful for contractors, trucking companies, staffing firms, manufacturers, wholesalers, medical suppliers, and other businesses that invoice creditworthy organizations.

Common uses include:
  • payroll while customers process invoices;
  • fuel, materials, and supplier costs for the next job;
  • accepting a larger contract without waiting for old invoices;
  • smoothing a predictable receivables cycle.
Factoring is usually not designed for consumer invoices, disputed work, very small invoice volume, or customers with weak credit.

How factoring works

  1. The business issues an eligible invoice for completed goods or services.
  2. The factor verifies the invoice and customer.
  3. If approved, the factor advances an agreed percentage.
  4. The customer pays according to the assigned payment instructions.
  5. The reserve is released, minus fees and other contract charges.
The business must understand recourse, notice of assignment, reserves, minimum volume, concentration limits, and who communicates with customers.

What providers may review

  • receivables aging report;
  • invoice documentation and proof of completion;
  • customer creditworthiness;
  • customer concentration;
  • disputes, offsets, retainage, or chargebacks;
  • existing liens on receivables;
  • business entity and ownership information;
  • industry and invoice eligibility.

Factoring vs. other options

Swipe the table sideways to see every column.

OptionUnderwriting focusBest aligned with
Invoice factoringQuality of eligible invoices and customersSpecific B2B receivables delays
Working capital loanBusiness cash flow and ability to payGeneral operating needs
Revenue-based financingRevenue and depositsShort-term needs backed by consistent sales
Short-term loanBusiness and owner profile plus cash flowA defined one-time expense
Frequently asked questions
  • Is invoice factoring a loan?
    Factoring is generally structured as the purchase of eligible receivables, not a conventional loan. Some invoice-financing products use different structures, so review the agreement carefully.
  • Will my customers know?
    Many factoring arrangements require notice of assignment or direct payment to the factor. Ask exactly how customer communication and collections will work.
  • What does factoring cost?
    Cost can include a factoring fee, discount rate, wire fee, minimum-volume charge, due-diligence fee, or other contract charges. Pricing may increase the longer an invoice remains unpaid.
  • What is recourse?
    Recourse determines whether the business must repurchase or replace an invoice if the customer does not pay under specified circumstances. The agreement should define this clearly.

Explore Invoice Factoring Options

Submitting an inquiry does not guarantee approval or funding. Program availability, amounts, terms, costs, and timing depend on the applicant and funding provider. Expedited applications are generally reviewed within 24–48 hours; review time is not a funding guarantee.

Check Your Options

Other funding structures to compare

Working Capital Loans

Business-purpose financing for near-term operating needs, structured according to the specific offer and agreement.

Learn more

Revenue-Based Financing

Funding evaluated substantially on business revenue and expected cash flow, with remittance shaped by the agreement.

Learn more

Merchant Cash Advance

Capital in exchange for an agreed amount of future business receivables, with remittance collected daily or weekly under the contract.

Learn more
Last reviewed: July 2026.