Financing guide

Invoice factoring

Waiting 30 to 90 days for customers to pay? Invoice factoring turns your outstanding B2B invoices into cash now, so you can cover payroll, restock, and take on new work without waiting.

See if you qualify

Free to use
No obligation
Checking won’t affect your credit

How invoice factoring works

Every factoring partner has its own terms, but the basic flow is the same.

01

You invoice your customer

You deliver goods or services to a business or government customer and send an invoice on your normal payment terms.
02

You sell the invoice to a factoring partner

The partner advances a large share of the invoice’s value up front, usually within days of approval.
03

Your customer pays the factor

Your customer pays the invoice on its usual terms, typically directly to the factoring partner.
04

You receive the balance

Once the invoice is paid, the partner releases the remaining balance to you, minus its fee.

Recourse vs. non-recourse factoring

Recourse factoring

You stay responsible if your customer doesn’t pay: you may have to buy the invoice back or replace it. Because the factor takes less risk, fees are often lower.

Non-recourse factoring

The factor takes on some or all of the risk that your customer can’t pay, usually for a higher fee. Coverage varies, so read exactly which situations the agreement protects you in.

Is it the right fit?

You sell to businesses or government agencies on net payment terms
Your customers are creditworthy and pay reliably
Slow-paying invoices are holding back payroll, inventory, or growth
Common in trucking, staffing, manufacturing, distribution, and government contracting

Factoring usually isn’t the right tool for sales to individual consumers, disputed invoices, or invoices already pledged to another lender.

What factoring partners look at

Your customers’ credit. Their ability and history of paying on time.
Invoice quality. Work that’s been delivered, accepted, and isn’t in dispute.
Concentration. Whether most of your invoices go to one customer.
Existing liens. Whether another lender already has a claim on your receivables.

Fees vary by partner, your customers, and how long they take to pay. Your partner will set out its fees before you sign. See our disclosures for how we’re paid.

Invoice factoring FAQ

Will my customers know I’m factoring?

Often, yes. In most factoring arrangements your customers are told to pay the factor directly. Some funding partners offer arrangements where customers keep paying you, so ask about this if it matters to you.

Is invoice factoring a loan?

Factoring is generally structured as a sale of your invoices to the funding partner rather than a loan. Your agreement will spell out exactly how it works, including who bears the risk if a customer doesn’t pay.

Does factoring depend on my credit?

Factoring partners usually focus on the creditworthiness of your customers, since they are the ones paying the invoices. Each partner sets its own requirements and may review your business as well.

How quickly can I get paid?

Timing depends on the funding partner. Setting up the first time takes longer while the partner reviews your business and customers; after that, funding against new invoices is often quick.

Other ways to fund your business

Purchase order financing

A funding partner pays your supplier directly so you can fulfill a confirmed order without tying up your own cash.

Best for: signed POsBusinesses holding a signed PO from a creditworthy customer.

Working capital

Flexible short-term funding when you need cash flow but don’t have a specific PO or invoice to finance against.

Best for: general cash flowCovering payroll, inventory, or a gap between paydays.

Tired of waiting on invoices?

Two minutes of questions, then we match you with funding partners suited to your business.