Invoice Factoring

Invoice factoring (also called accounts-receivable factoring) is a way for businesses to turn unpaid customer invoices into immediate cash. Instead of waiting 30, 60, or 90 days for customers to pay, you sell those invoices at a small discount to a third-party “factor” and receive most of the money up-front—usually within 24 hours.

How it works (4 simple steps)

1. You deliver goods/services and issue invoices to your B2B customers.
2. You sell the invoices to a factoring company.
3. The factor advances 70–90 % of the invoice value to you the same or next day.
4. When your customer pays the factor, the remaining balance—minus a factoring fee (typically 1–5 % of the invoice)—is sent to you.

Key points

• Not a loan: It’s a sale, so no new debt appears on your balance sheet.
• Approval is fast: Factors look mainly at your customers’ creditworthiness, not yours.
• Recourse vs. non-recourse:
  – Recourse: you must buy back any unpaid invoices.
  – Non-recourse: the factor absorbs the loss if a customer fails to pay (fee is higher).
• Outsourced collections: The factor handles credit checks and payment chasing—freeing up your time.

Industries that use it most
Trucking & logistics, staffing agencies, manufacturing, wholesale, healthcare, and any B2B business with long payment cycles.

Bottom line
Invoice factoring is quick, flexible working-capital financing that converts receivables into cash without adding debt, helping businesses maintain payroll, buy inventory, or take on new orders while customers pay on their normal terms.

Advantages of Invoice Factoring

• Instant cash flow – Receive up to 90 % of invoice value the same day you bill, instead of waiting 30-90 days for customer payment.
• No new debt – Factoring is a sale of receivables, so nothing appears as a liability on your balance sheet.
• Approval based on your customer’s credit, not yours – Even start-ups or businesses with thin credit can qualify if their customers are creditworthy.
• Outsource credit control – The factor handles collections and credit checks, freeing your team to sell and operate.
• Scalable funding line – The more you invoice, the more cash you can draw; the facility grows automatically with sales.
• Predictable working capital – Eliminates cash-flow gaps that can stall payroll, inventory purchases, or new contracts.
• Early-payment discounts – Cash in hand lets you capture supplier discounts (2/10 Net 30, etc.), often offsetting the factoring fee.
• Flexible terms – Spot-factor single invoices or set up revolving arrangements; no long-term lock-ins.
• Credit protection (non-recourse) – Optional non-recourse factoring shifts customer non-payment risk to the factor.
• Speed to close – Most factors can set up an account and fund first invoices within 48-72 hours.