Extended payment terms
Access liquidity while established commercial customers remain within agreed net payment periods.
Funding Solutions
Invoice Factoring
Explore invoice factoring for eligible B2B receivables and understand customer credit, servicing, recourse, and cash-flow considerations.
Explore Your OptionsOverview
Turn the value of eligible invoices into working liquidity before customers pay.
Invoice factoring generally involves selling or assigning eligible accounts receivable to a factor. The factor provides an initial payment or advance based on approved invoices, manages or participates in collection under the agreement, and releases any remaining reserve after the customer pays, less applicable fees and adjustments. It is commonly used by B2B businesses that invoice creditworthy customers on terms.
Because the transaction is tied to receivables, review may emphasize the customer’s payment capacity, invoice validity, aging, dilution, disputes, and concentration—not only the seller’s balance sheet. Factoring should not be described as one uniform product: notification, recourse, reserves, collections, minimums, and contract commitments can vary materially between providers.
Common uses
Where this path may help.
Factoring can be useful where earned, eligible commercial invoices—not projected future sales—are the primary source of the cash-flow delay.
Larger orders or contracts
Fund payroll, materials, or vendors for new work without waiting for earlier approved invoices to settle.
Concentrated growth
Support expansion driven by strong customers while carefully managing the additional risk created by customer concentration.
Predictable receivable cycles
Create a repeatable liquidity process for eligible invoices when business collections regularly lag operating expenses.
How it works
How invoice factoring generally works.
The provider verifies the business, customers, and invoices, then applies the sale and collection mechanics stated in the factoring agreement.
- 01
Submit eligible invoices
The business presents invoices and supporting delivery or performance records for customers and transactions allowed under the facility.
- 02
Verification and purchase
The factor reviews the account debtor, invoice validity, aging, disputes, concentration, and contractual eligibility before purchasing or advancing on an invoice.
- 03
Collection and reconciliation
Customer payment is directed or administered under the agreement. The factor applies fees and adjustments and releases any remaining reserve according to the contract.
Provider review
What may be evaluated.
Factoring decisions are often anchored in the quality of the receivable pool and the account debtors expected to pay it.
Business and transaction factors
- Customer credit quality and payment history
- Invoice age, validity, disputes, offsets, and dilution
- Customer and industry concentration
- Recourse terms and the business’s ability to absorb chargebacks
- Sales volume, invoice cadence, and contract commitments
Commonly requested documentation
- Accounts-receivable aging report
- Invoices and proof of delivery or completed service
- Customer contracts, purchase orders, or acceptance records
- Recent bank statements and basic business information
- Existing lien, UCC, or receivables-financing information when requested
Decision points
Understand the full factoring relationship.
The speed of receiving cash is only one part of the decision; customer experience, recourse, reserves, and contract scope also matter.
Factoring is not universally a loan
A traditional factoring arrangement is generally based on a sale or assignment of receivables. The actual legal rights and economic substance depend on the signed agreement.
Customer communication varies
Some facilities notify customers and direct payment to a controlled account. Businesses should understand collection practices and explain the process professionally where needed.
Recourse and reserves matter
If a customer does not pay, the business may have repurchase or replacement obligations depending on the contract. Reserve releases, disputes, and chargebacks affect realized proceeds.
FAQ
Common questions.
What is invoice factoring?
Invoice factoring generally involves selling or assigning eligible commercial receivables to a factor in exchange for earlier cash. The provider’s agreement controls the purchase, advance, reserve, fee, collection, and recourse mechanics.
Is invoice factoring the same as a business loan?
Not generally. Traditional factoring is structured around the sale or assignment of receivables, while a loan creates a borrowing obligation. Contract substance matters, so the actual agreement—not only the marketing label—should be reviewed.
How is factoring different from accounts-receivable financing?
Factoring generally involves selling eligible invoices. Accounts-receivable financing is commonly structured as borrowing secured by a pool of receivables. Ownership, collections, reporting, recourse, pricing, and customer notification can differ.
Will customers know invoices are being factored?
Some arrangements require notice and direct customers to pay the factor or a controlled account. Other servicing structures differ. The business should confirm notification and collection procedures before entering the facility.
What makes an invoice eligible?
Providers may consider the customer, invoice age, delivery or service completion, disputes, offsets, concentration, and contract terms. Consumer receivables, contingent invoices, stale balances, or disputed amounts may be treated differently or excluded.
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