Will my customers know I'm factoring?

Yes, in standard (notification) factoring. There are 'non-notification' programs but they're rarer and typically more expensive.

Recourse vs. non-recourse — which is better?

Recourse is cheaper (typically 0.5–1% per 30 days less). Non-recourse offloads bad-debt risk to the factor — useful if you have customer concentration or worried about credit losses.

Can I factor only some of my invoices?

Spot factoring (selective) is increasingly available. Many traditional programs require all-or-nothing on a customer-by-customer basis.

Is factoring better than a line of credit?

If you have heavy receivables and customers paying slowly, factoring scales with sales in a way an LOC can't. If your needs are unpredictable and not tied to invoices, an LOC may be cheaper.

How long does setup take?

Initial onboarding usually takes 3–10 business days. Once set up, individual invoice funding typically happens within 24 hours of submission.

Lending Guide

Invoice Factoring

Convert your receivables into cash in 24 hours. Designed for B2B businesses where customers pay on net-30, net-60, or net-90 terms.

What is invoice factoring?

Invoice factoring is the sale of your accounts receivable (unpaid customer invoices) to a factoring company at a discount, in exchange for immediate cash. The factor advances you 70–95% of the invoice value upfront, then collects directly from your customer when the invoice is due. Once paid, you receive the remaining balance minus the factor's fee.

Factoring is one of the most common funding tools in trucking, staffing, manufacturing, government contracting, and any B2B industry with long payment cycles. Unlike a loan, factoring isn't debt on your balance sheet — it's the sale of an asset.

Two structures exist: recourse factoring (you take back the invoice if your customer doesn't pay) and non-recourse factoring (the factor absorbs the credit risk). Non-recourse is more expensive but offloads bad-debt risk.

How it works

1
Sign a factoring agreement
Set up the relationship with a factor — terms include advance rate (70–95%), fee structure, recourse vs. non-recourse, and any monthly minimums.
2
Submit invoices for funding
Submit eligible invoices via portal or batch upload. Factor verifies and advances within 24 hours.
3
Customer pays the factor directly
Customers are notified to pay invoices to the factor's lockbox or account.
4
Receive the remainder, minus fees
Once the customer pays, you receive the holdback (the 5–30% reserve), minus the factor's fee.

Key details

Minimum Revenue

$10,000+ monthly invoice volume typical · No fixed revenue floor

Credit Score

550+ typical (factor is more interested in your customers' credit than yours)

Funding Timeline

Initial setup: 3–10 days · Funding on submitted invoices: 24 hours

Loan Amounts

$10,000 – $20,000,000+ in monthly factoring capacity

Rates

1–5% per 30 days (typically 1.5–3.5% for first 30 days, then incremental)

Industries Served

Trucking and logistics, staffing, manufacturing, distribution, oil & gas services, government contracting, B2B services, IT services, janitorial, and any B2B sector with net-30+ terms.

Qualifications

B2B business model (selling to other businesses or government)
Customers with reasonable creditworthiness (the factor underwrites your customers)
Invoices unencumbered by other liens
Minimum monthly factoring volume requirements vary

Pros and cons

Pros

Solves the receivables-cycle cash crunch
Approval based on your customers' credit, not yours
Scales with your sales — no fixed credit limit
Outsource collections to the factor
Not debt — doesn't add liabilities to balance sheet

Cons

Customers know you're factoring (notice of assignment)
Per-invoice fees add up — most expensive when invoices pay slowly
Long-term contracts with monthly minimums in some programs
Recourse factoring leaves you on the hook if customers don't pay

How it compares

Side-by-side comparison of small business funding options.

Product	Speed	Cost	Term	Best for
SBA 7(a)	30–90 days	Prime + 2.25–4.75%	Up to 25 yrs	Largest, lowest-cost capital
Business Line of Credit	1–3 weeks	8–25% APR	Revolving 1–3 yrs	Ongoing flexibility
Term Loan	1–2 weeks	10–30% APR	1–10 yrs	One-time investments
Working Capital	1–3 days	1.10–1.40 factor	3–18 mo	Speed and minimal docs
MCA	Same day–48 hrs	1.15–1.50 factor	3–12 mo	Lowest credit / fastest funding
Equipment Financing	1–7 days	7–25% APR	Useful life of asset	Equipment-secured purchases

Frequently asked questions

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