Invoice Factoring

Invoice factoring is a financing solution that allows businesses to access cash by leveraging unpaid customer invoices. Instead of waiting for customers to pay on net terms, factoring enables you to convert outstanding receivables into immediate working capital to support operations or growth.

How Invoice Factoring Works

• An invoice represents payment owed for products or services that have already been delivered.

• Your business sells eligible invoices to a third-party factoring company.

• In return, you receive an advance on those invoices, providing cash flow while waiting for customers to pay.

What Determines Rates and Approval

Pricing and eligibility are primarily based on:

• The creditworthiness of the customer responsible for paying the invoice

• The expected time frame until the invoice is paid

Questions to Consider

Before using invoice factoring, consider:

• Are you currently factoring any receivables?

• Do you have an immediate need to improve cash flow?

Documentation Typically Required

To move forward, factors generally request:

• A sample invoice

• An accounts receivable aging report

Helpful Things to Know

• Factoring is available only for business-to-business (B2B) transactions.

• This structure is typically set up as a residual account, supporting an ongoing financing relationship.

• Invoice factoring allows you to get paid on your invoices right away, rather than waiting for customer payment terms to be fulfilled.