Turn unpaid invoices into working capital today.
Invoice factoring converts your accounts receivable into immediate cash — perfect for businesses whose customers pay on net-30, net-60, or longer.
What invoice factoring is
Invoice factoring (also called accounts receivable factoring) is a financing arrangement where you sell your unpaid invoices to a third party (the factor) at a small discount. The factor advances you most of the invoice value upfront, then collects payment from your customer directly.
When your customer pays the invoice, the factor releases the remaining balance to you minus their fee. Your customers see a normal invoice and pay as usual — the funding happens entirely on your end.
Factoring is especially powerful for B2B businesses with creditworthy customers on long payment terms. The factor effectively underwrites your customer's ability to pay, not yours, which makes this product accessible even for newer businesses or weaker credit profiles.
How invoice factoring works in practice
You submit one or more unpaid invoices to the factor. The factor verifies the invoices, checks the creditworthiness of your customers, and advances 80–95% of the face value to your business account — typically within 1–2 business days.
Your customer pays the invoice to the factor according to the original terms. Once payment clears, the factor releases the holdback to you minus a discount fee (typically 1–3% per 30 days).
Recourse vs. non-recourse: in a recourse arrangement, you're responsible if the customer doesn't pay. In non-recourse, the factor absorbs the bad-debt risk (typically at a higher fee). We surface both options when they're available.
What to weigh before you apply.
Pros
- Approval is based on your customer's creditworthiness, not just yours
- Available for newer businesses and weaker credit profiles
- No new debt on your balance sheet — it's a sale of receivables
- Scales with your sales: more invoices means more available funding
Cons
- Your customers may interact with the factor directly during collection
- Cost is higher than traditional financing for similar dollar amounts
- Best for B2B businesses with creditworthy customers — B2C is rarely a fit
- Recourse factoring still leaves you liable for customer non-payment
Questions before you apply.
Will my customers know I'm using a factor?
In traditional (notification) factoring, yes — the factor notifies your customers to remit payment directly. In non-notification factoring, your customers continue paying you and you forward the funds to the factor. Both arrangements exist; we present what's available based on your customers and industry.
Can I factor only some of my invoices?
Yes. Spot factoring lets you choose which invoices to factor on a case-by-case basis. Whole-ledger factoring covers all your invoices at lower rates but requires you to factor everything.
How long does this last?
There's no fixed term — factoring continues as long as you keep submitting invoices. Most arrangements have a minimum monthly volume commitment.