Question 1

What is invoice factoring?

Accepted Answer

Invoice factoring is a financing option where your business sells its outstanding invoices to a funding company at a discount in exchange for immediate cash. Instead of waiting 30, 60, or 90 days for customers to pay, you receive the majority of the invoice value upfront.

Question 2

How is invoice factoring different from a business financing product?

Accepted Answer

Invoice factoring is not a financing product. You are selling an asset -- your receivables -- rather than borrowing against them. Approval is based on the creditworthiness of your customers, not your business credit score.

Question 3

What types of businesses use invoice factoring?

Accepted Answer

Invoice factoring is commonly used by staffing companies, trucking and freight companies, manufacturers, wholesalers, government contractors, and any business that invoices other businesses or government entities on net terms.

Question 4

How much of the invoice value do I receive upfront?

Accepted Answer

Advance rates vary but typically range from 70 to 90 percent of the invoice face value. Once your customer pays the invoice in full, you receive the remaining reserve minus the factoring fee.

Question 5

Does my credit score affect invoice factoring approval?

Accepted Answer

Your personal credit score is generally not the primary factor in invoice factoring approval. The creditworthiness of your customers who owe the invoices is the main consideration.

Invoice Factoring

What Is Invoice Factoring

Industries That Use Invoice Factoring

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