Funding guide
Invoice Factoring: Get Paid Now for Outstanding Invoices
Invoice factoring is when a business sells its unpaid B2B invoices to a factoring company for an immediate advance — usually 70%–95% of the invoice value — and receives the remainder, minus a fee, when the customer pays. Approval depends mainly on your customers' creditworthiness, not yours.
Last updated October 23, 2026
What is a invoice factoring?
The factor verifies the invoice, advances funds, then collects from your customer directly. Once paid, the factor releases the reserve minus its fee.
Invoice financing (as opposed to factoring) uses invoices as collateral while you keep collecting from customers.
- Amount
- $10k – $10M
- Term
- Per invoice (30–90 days)
- Cost
- 1% – 5% per 30 days
- Speed
- 1 – 3 days
- Credit
- Customer credit matters most
Source: industry estimates compiled by BusinessFundingQuote.com; actual terms are set by each provider.
Requirements
- B2B or B2G invoices
- Creditworthy customers
- Invoices free of other liens
- Accounts receivable aging report
Pros and cons
Pros
- Approval based on customers' credit
- Scales with sales
- No long-term debt
- Fast once set up
Cons
- Customers know you're factoring (usually)
- Fees add up on slow payers
- Not for B2C businesses
Who it's best for
- Trucking and logistics
- Staffing agencies
- Manufacturers and wholesalers
- Government contractors
Invoice Factoring vs alternatives
| Option | Amount | Term | Typical cost | Speed | Credit |
|---|---|---|---|---|---|
| Invoice Factoring | $10k – $10M | Per invoice (30–90 days) | 1% – 5% per 30 days | 1 – 3 days | Customer credit matters most |
| Business Line of Credit | $10k – $500k | Revolving; draws 6–24 mo | 10% – 60% APR | 1 – 7 days | 600 – 680+ |
| Working Capital Loans | $5k – $1M | 3 – 24 months | Varies by product | 1 – 5 days | 550 – 680+ |
| Merchant Cash Advance | $5k – $500k+ | 3 – 18 months | 1.10 – 1.50 factor | 24 – 72 hours | 500+ often accepted |
| Revenue-Based Financing | $10k – $5M | 6 – 36 months (variable) | 1.1x – 1.5x cap | 2 – 10 days | Revenue-focused |
Frequently asked questions
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Written by
BusinessFundingQuote Editorial Team
Small business finance writers
Reviewed by
Funding Review Desk
Reviewed for accuracy against current market practices
Rates and ranges on this page are typical market estimates for educational purposes, not offers. How we make money.