Invoice Factoring: Turn Unpaid Invoices Into Working Capital
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Invoice factoring converts unpaid B2B invoices into immediate cash: a factor advances 70–95% of the invoice value up front, collects from your customer, then remits the balance minus a fee (typically 1–5% per 30 days). Qualification rests on your customers' creditworthiness, not yours — which makes factoring accessible to young businesses with strong clients.
At a glance
| Typical amounts | 70–95% of invoice value advanced |
|---|---|
| Funding speed | 1–3 business days after setup |
| Best for | B2B businesses with 30–90 day payment terms: staffing, trucking, manufacturing, wholesale, government contractors. |
Requirements
- B2B or B2G invoices for delivered work
- Creditworthy customers
- Invoices free of liens or prior assignment
- Personal credit is largely irrelevant
How it works
- Submit invoices to the factor.
- Factor verifies invoices and advances 70–95%.
- Your customer pays the factor per the invoice terms.
- Factor sends you the reserve minus its fee.
Pros and cons
| Pros | Cons |
|---|---|
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See if you qualify for invoice factoring
Answer 6 quick questions — no impact on your credit score, no obligation.
Check Your Eligibility →Frequently Asked Questions
Recourse vs non-recourse — what is the difference?
With recourse factoring you buy back invoices your customer never pays; non-recourse shifts defined credit risk to the factor for a higher fee.
How much does factoring cost?
Typically 1–5% of invoice value per 30 days outstanding. A 2%/30-day fee on a 60-day invoice is roughly a 24% annualized cost.
Is factoring a loan?
No — it is a sale of an asset (the receivable). There is no debt and no fixed repayment schedule.
Related options
- Working Capital Loans — Covering payroll, inventory purchases, seasonal cash-flow gaps, and short-term opportunities.
- Merchant Cash Advance — Businesses with strong card sales that need money fast and have been declined for cheaper products.
- Equipment Financing — Trucks, construction machinery, restaurant/medical equipment, manufacturing lines, IT hardware.