Rise Business Funding

Invoice Factoring

Invoice factoring turns your unpaid invoices into immediate working capital. Instead of waiting 30, 60, or 90 days for customers to pay, you sell your outstanding invoices to a factoring company and receive up to 95% of the invoice value upfront, often within 24 hours. Rise connects B2B businesses with invoice factoring solutions that keep cash flowing while your customers pay on their own timeline. No new debt on your books. No collateral required. Just the capital your invoices have already earned.

Check Eligibility
Business professional reviewing invoices and paperwork

What Is Invoice Factoring?

Invoice factoring is a financing arrangement where you sell your outstanding B2B invoices to a third-party factoring company at a discount in exchange for immediate cash. The factoring company pays you an advance, typically 80% to 95% of the invoice face value, and then collects payment directly from your customer. Once the customer pays, you receive the remaining balance minus the factoring fee.

Unlike a business line of credit or term loan, invoice factoring is not a loan. You are selling an asset (your receivable), so no debt appears on your balance sheet. This makes it particularly attractive for businesses with long payment cycles . Manufacturing companies waiting on net-60 terms, staffing agencies billing monthly, and service businesses with slow-paying enterprise clients.

Approval is based primarily on your customers' creditworthiness, not yours. Use our business loan calculator to compare factoring costs against other financing options.

Requirements to Qualify for Invoice Factoring

Personal FICO Score

No minimum required

Invoice factoring approval is based on your customers' credit, not yours. Even businesses with poor personal credit can qualify if their clients pay reliably.

Monthly Revenue

$5,000+ in B2B invoices

You need outstanding invoices from creditworthy business customers. Consumer (B2C) invoices typically do not qualify for factoring.

Time in Business

No minimum (startups welcome)

Factoring companies evaluate your invoices and your customers' payment history, not how long your business has been operating. Startups with B2B clients can qualify from day one.

Invoice Quality

Creditworthy B2B customers

Invoices must be for completed work or delivered goods to established business customers. Invoices that are past due, disputed, or owed by consumers typically do not qualify.

Not sure if your invoices qualify? Rise evaluates your receivables and your customers' payment patterns to find the right factoring arrangement. Businesses across industries with B2B invoices are welcome, including healthcare practices waiting on insurance reimbursements and construction companies with progress billing.

How Invoice Factoring Works

Submit Your Invoices

After completing work or delivering goods, you submit your outstanding invoices to the factoring company. You choose which invoices to factor. You can factor all of them or only the ones where you need faster payment.

Receive an Advance (80% to 95%)

The factoring company verifies the invoices and advances you 80% to 95% of the face value, typically within 24 hours. This immediate cash injection replaces the 30 to 90 day wait for customer payment.

Factoring Company Collects Payment

The factoring company takes over collection from your customer. Your customer pays the factoring company directly according to the original invoice terms. This removes collections from your workload entirely.

Receive the Remaining Balance

Once your customer pays the full invoice, the factoring company sends you the remaining balance (5% to 20%) minus their factoring fee. The fee typically ranges from 1% to 5% of the invoice value depending on volume and customer credit quality.

See If You Qualify in Minutes

Find out how much working capital your invoices can unlock. The application takes less than 5 minutes and won't impact your credit score.

Check EligibilityPre-Qualify Now

Pros & Cons of Invoice Factoring

Pros

Immediate Cash From Unpaid Invoices

Convert 30, 60, or 90-day receivables into capital within 24 hours once your factoring account is set up. Stop waiting for customers to pay before you can cover expenses or invest in growth.

No New Debt on Your Balance Sheet

Factoring is a sale of receivables, not a loan. Your debt-to-equity ratio stays clean, which matters if you plan to pursue traditional financing later.

Approval Based on Customer Credit, Not Yours

Your personal credit score is largely irrelevant. If your customers are creditworthy businesses that pay reliably, you can qualify even with poor personal credit.

Outsource Collections

The factoring company handles follow-up and collection from your customers, freeing your team to focus on operations and revenue generation rather than chasing payments.

Scales With Your Business

As your invoicing volume grows, your available funding grows automatically. There is no need to renegotiate a credit limit or reapply for a larger loan.

Cons

Factoring Fees Reduce Your Margins

Fees of 1% to 5% per invoice reduce your effective revenue. For low-margin businesses, this cost needs to be weighed against the value of faster cash flow. A business line of credit may offer a lower cost for businesses that qualify.

Customer Relationship Impact

Your customers will know a third party is collecting on your invoices. Some businesses perceive this as a sign of financial difficulty. Choose a factoring company with professional, discreet collection practices.

Only Works for B2B Invoices

Factoring requires invoices to creditworthy business customers. If your revenue comes primarily from consumers (B2C), factoring won't work. Consider a merchant cash advance or short-term loan instead.

Alternatives to Invoice Factoring

Business Line of Credit

  • Revolving access to funds without selling your invoices
  • Pay interest only on what you draw, resulting in lower cost for qualified businesses
  • You retain full control of customer relationships and collections
  • Requires stronger credit profile and longer operating history
  • Better for businesses that want ongoing access rather than invoice-by-invoice funding

Short-Term Business Loan

  • Lump sum capital with fixed repayment over 3 to 18 months
  • No third-party involvement with your customer relationships
  • Predictable payment schedule regardless of invoice timing
  • Requires stronger credit and revenue documentation
  • Better when you need a specific amount for a defined purpose

Revenue-Based Financing

  • Repayments scale with your monthly revenue automatically
  • No invoices needed; works for B2C and B2B businesses alike
  • Fixed repayment cap so you know total cost upfront
  • No impact on customer relationships
  • Better for businesses with consistent revenue but no large outstanding invoices

Frequently Asked Questions About

Invoice Factoring

What is invoice factoring?

Invoice factoring is a financing method where you sell your unpaid B2B invoices to a factoring company in exchange for immediate cash, typically 80% to 95% of the invoice value. The factoring company then collects payment from your customer and sends you the remaining balance minus their fee once the customer pays.

How is invoice factoring different from invoice financing?

With invoice factoring, you sell your invoices and the factoring company handles collection from your customers. With invoice financing (also called accounts receivable financing), you borrow against your invoices as collateral but remain responsible for collecting payment yourself. Factoring involves a third party contacting your customers; financing does not.

How much of my invoice value can I receive upfront?

Most factoring companies advance between 80% and 95% of the invoice face value. The exact percentage depends on your industry, invoice volume, your customers' creditworthiness, and the factoring company's terms.

How fast can I receive funding through invoice factoring?

Once your account is set up and invoices are verified, advances are typically funded within 24 hours. The initial setup process may take a few days, but subsequent invoice submissions are funded within 24 hours.

What fees does invoice factoring charge?

Factoring fees typically range from 1% to 5% of the invoice value, depending on volume, customer credit quality, and how long the invoice takes to be paid. Some companies use a flat fee per invoice; others use a tiered rate that increases the longer the invoice remains unpaid. Use our business loan calculator to estimate costs.

Do I need good credit to qualify for invoice factoring?

No. Your personal credit score is not the primary factor. The factoring company evaluates the creditworthiness of your customers, not you. Businesses with poor credit can qualify as long as their customers are reliable payers.

Can startups use invoice factoring?

Yes. Unlike most business financing products, invoice factoring has no minimum time-in-business requirement. As long as you have legitimate invoices from creditworthy B2B customers, you can factor invoices from day one of operations.

What types of invoices can be factored?

Factoring companies typically accept invoices for completed work or delivered goods billed to established B2B customers. Invoices that are past due beyond 90 days, under dispute, or billed to individual consumers generally do not qualify.

Will my customers know I am using invoice factoring?

Yes. In most factoring arrangements, the factoring company contacts your customers directly to verify invoices and collect payment. This is a standard business practice, but some businesses prefer to maintain direct control of collections. If this is a concern, ask about non-notification factoring options.

What is the difference between recourse and non-recourse factoring?

With recourse factoring, you are responsible if your customer fails to pay the invoice, meaning you must buy it back or replace it. With non-recourse factoring, the factoring company absorbs the loss if the customer doesn't pay. Non-recourse factoring typically charges higher fees to compensate for the added risk.

Can I choose which invoices to factor?

This depends on the factoring company. Some offer spot factoring, where you factor individual invoices as needed. Others require a contract where you factor all invoices above a certain threshold. Spot factoring offers more flexibility but may carry higher per-invoice fees.

How does invoice factoring affect my taxes?

Factoring fees are generally treated as a business expense and may be tax-deductible. However, tax treatment can vary depending on your business structure and jurisdiction. Consult with a tax professional for guidance specific to your situation.

What industries benefit most from invoice factoring?

Industries with long payment cycles benefit most: manufacturing, staffing agencies, transportation and trucking, construction, wholesale distribution, and professional services. Any B2B business that regularly waits 30+ days for customer payment can benefit from factoring.

Can I use invoice factoring alongside other financing?

Yes, many businesses use factoring in combination with a business line of credit or other financing products. However, some lenders may place a lien on your receivables, which could conflict with a factoring arrangement. Disclose all existing financing to your factoring provider.

Is invoice factoring right for my business?

Factoring works best for B2B businesses with creditworthy customers and payment terms of 30+ days. If you need faster cash flow without taking on debt, factoring is an excellent option. If your revenue is primarily B2C, consider a merchant cash advance instead. If you want ongoing revolving access to capital, a business line of credit may be a better fit.

Trusted by Small Businesses Across the USA

Decision After Complete Documents

Within 2 Hours

Funding Available

Up to $200K

Businesses Funded

Across All 50 States

Invoice Factoring in Your State

Available across all 50 states and Washington, D.C. Pick your state to see local programs, qualification specifics, and state-tailored FAQs.

Turn Your Invoices Into Working Capital

Stop waiting 30, 60, or 90 days for customers to pay. Factor your invoices today and get funded within 24 hours. No debt, no collateral, no credit score requirements.

Apply NowPre-Qualify Now