Funding types
Invoice factoring: turn unpaid invoices into cash now
If your business bills other businesses and waits 30, 60 or 90 days to get paid, factoring converts those invoices into cash today. Here is how it works.
- Best for
- B2B businesses waiting on invoices
- Speed
- Often days
- Credit
- Your customers' credit matters more
- Repayment
- Paid when your customer pays
- Collateral
- The invoices
With invoice factoring, you sell unpaid invoices to a factoring company. It advances most of the invoice value upfront, collects payment from your customer, then sends you the rest minus its fee. Because the funder is relying on your customers paying, your own credit matters less.
Who uses it
- Trucking and logistics companies
- Staffing agencies
- Manufacturers and wholesalers
- Contractors and B2B service firms
Recourse vs. non-recourse
With recourse factoring, you're responsible if a customer doesn't pay. With non-recourse, the factoring company takes on more of that risk, usually for a higher fee. Read what the agreement covers.
Factoring vs. invoice financing
In factoring, the factor usually collects from your customer. In invoice financing, you borrow against invoices and collect yourself. Ask which you're getting.
Questions owners ask
Does invoice factoring add debt?
Factoring is typically a sale of invoices rather than a loan, so it generally doesn't add debt to your balance sheet. Confirm the structure with the provider and your accountant.
Related
- MCA buyout
- Working capital
- Business line of credit
- Merchant cash advance
- MCA refinance & consolidation
- Revenue-based financing
- Equipment financing
All business funding options › · Calculators ›
General information, not financial or legal advice. Terms vary by lender and business.
Industries that use this most
Each page below covers what that industry borrows for, how many independent businesses of that kind are operating, and what an underwriter looks at in that sector.
- Plumbing
- Electricians
- Roofing
- Cleaning & janitorial
- Photography & video
- Print shops & signage
- Security services
- Medical practices
- Trucking
- Construction
If you are waiting 30 to 90 days on commercial customers, factoring turns work you have already done into cash now. Merchant Fund Express factors invoices for independent businesses and underwrites on your customers rather than on you.
Funding subject to approval.