What is invoice factoring in simple terms?
Invoice factoring is when a business sells its unpaid B2B invoices to a factoring company at a discount to receive cash quickly, instead of waiting for customers to pay.
How much does invoice factoring cost?
Invoice financing rates often range from about 1% to 3% per 30 days, plus possible service or transaction fees. Your exact cost depends on debtor credit quality, invoice terms, and industry risk.
What’s the difference between recourse and non-recourse factoring?
In recourse factoring, you take responsibility if your customer doesn’t pay; fees are generally lower. In non-recourse factoring, the factor assumes certain credit risks (often insolvency) and fees are typically higher.
How fast can a business receive funds?
After onboarding, many businesses receive advances within 24–72 hours of submitting an eligible invoice, subject to verification and provider timelines.
Is invoice factoring a loan?
No. Factoring is typically structured as a sale of receivables, not a loan. Approval focuses on the quality of your invoices and the credit of your customers.
Does factoring affect customer relationships?
It can be neutral if handled transparently with clear notice of assignment and accurate billing. Some providers offer non-notification options in certain circumstances.
When is a line of credit better than factoring?
A business line of credit may be better if you qualify for a lower APR, want revolving access to funds beyond invoices, and can meet lender covenants. Explore LOC options for details.
