Invoice Factoring: Convert Receivables Into Immediate Cash
Convert unpaid invoices into immediate cash flow for your business. Our AI matches you with the right invoice factoring provider for your specific needs.
Fast Access to Working Capital
Get up to 90% of your invoice value within 24-48 hours, without waiting 30, 60, or 90 days for customer payment.
Immediate Cash Flow
Convert unpaid invoices to cash within 24-48 hours
Simple Qualification
Based on your customers' creditworthiness, not yours
No New Debt
Factoring is a sale of assets, not a loan
What is Invoice Factoring?
Invoice factoring is a financial solution that allows businesses to sell their unpaid invoices to a factoring company at a discount. Instead of waiting 30, 60, or 90 days for customers to pay, you can access up to 90% of the invoice value immediately, improving your cash flow and enabling you to cover expenses or pursue growth opportunities.
The factoring company takes over collection of the invoice from your customer. Once your customer pays the invoice, the factoring company pays you the remaining balance, minus their fee.
Key Characteristics of Invoice Factoring
- Advance rates of 70-90%
Receive the majority of your invoice value upfront, with the remainder (minus fees) paid when your customer settles the invoice
- Discount fee structure
Factoring companies charge a discount fee (typically 1-5% of invoice value) rather than interest
- Customer credit is key
Approval is based primarily on your customers' creditworthiness rather than your business credit
- Not a loan
Factoring is a sale of assets that doesn't create debt on your balance sheet
Invoice Factoring Market Growth
The invoice factoring industry continues to grow as more businesses discover its benefits for managing cash flow. The global factoring market now exceeds $3 trillion annually, with significant growth in sectors like manufacturing, transportation, and professional services.
70%
of factoring funds within 48 hours
$150K
average monthly factoring volume
85%
approval rate vs. bank loans
How Our AI Finds Your Perfect Invoice Factoring Solution
Lendec's proprietary AI technology analyzes your business profile and matches you with the right factoring provider.
Invoice Analysis
Our AI analyzes your invoicing patterns, customer payment histories, and industry benchmarks to understand your unique factoring needs.
Provider Matching
The AI compares your profile against our database of factoring providers to identify those most likely to approve your application with favorable terms.
Rate Optimization
Our system predicts the advance rates and fees you're likely to qualify for and negotiates with providers to secure the most competitive terms.
Funding Facilitation
Once matched, our platform streamlines the application process, document submission, and funding to get you capital in as little as 24 hours.
Types of Invoice Factoring
Different factoring structures to meet your specific business needs and payment preferences.
| Type | Collection Method | Discount Rates | Typical Advance | Best For | Time to Fund |
|---|---|---|---|---|---|
| Recourse Factoring | Factor collects from customer | 1-3% | 80-90% | Most businesses with creditworthy customers | 1-3 days |
| Non-Recourse Factoring | Factor collects and assumes credit risk | 2-4% | 70-85% | Businesses concerned about customer insolvency | 1-3 days |
| Spot Factoring | Single invoice factoring | 2-5% | 70-80% | Businesses with occasional cash flow needs | 1-2 days |
| Non-Notification Factoring | Business collects and forwards payment | 2-5% | 70-85% | Businesses wanting to maintain customer relationships | 2-4 days |
Which Factoring Type Is Right For You?
Choosing the right factoring structure depends on your business's specific needs, customer relationships, and risk tolerance. Our AI technology analyzes these factors to recommend the best option:
- Choose recourse factoring
If you have reliable customers and want the lowest possible rates
- Choose non-recourse factoring
If you want protection against customer bankruptcy or insolvency
- Choose spot factoring
If you only need occasional funding for specific invoices
- Choose non-notification factoring
If you prefer your customers not know you're using factoring
How Different Industries Use Invoice Factoring
Discover how businesses in your industry leverage invoice factoring to solve cash flow challenges and fuel growth.
Manufacturing
- Cover production costs while waiting for payment
- Purchase raw materials in bulk
- Invest in new equipment
- Meet payroll during production cycles
Staffing Agencies
- Cover weekly payroll expenses
- Expand workforce to take on larger contracts
- Fund recruitment and training initiatives
- Manage cash flow with long payment terms
Transportation
- Cover fuel and maintenance costs
- Meet driver payroll obligations
- Fund fleet expansion or repairs
- Manage insurance premium payments
Healthcare
- Bridge gaps in insurance reimbursements
- Purchase medical supplies and equipment
- Cover staffing costs during billing cycles
- Fund facility improvements
Professional Services
- Stabilize cash flow between projects
- Hire additional staff for large contracts
- Invest in marketing and business development
- Cover operating expenses during growth phases
Success Story
"As a growing staffing agency, we were constantly struggling with cash flow due to our weekly payroll obligations and clients who pay on 30-60 day terms. Invoice factoring through Lendec gave us immediate access to 85% of our invoice values, allowing us to take on larger contracts and grow our business by 40% in just six months."
— Michael R., Staffing Agency Owner
Invoice Factoring Eligibility Requirements
Understanding what providers look for can help improve your chances of approval.
Basic Requirements
- B2B or B2G business model (selling to businesses or government)
- Creditworthy customers with good payment histories
- Invoices for completed work or delivered products
- No major liens on your accounts receivable
- Minimum time in business (typically 3-6 months)
- No open bankruptcies
Documentation Needed
- Accounts receivable aging report
Shows all outstanding invoices and their age
- Sample invoices
Examples of your typical customer invoices
- Customer list
Information about your major customers
- Business formation documents
Articles of incorporation, licenses, etc.
- Bank statements
Last 3 months of business bank statements
Understanding Invoice Factoring Costs
Discount rates, advance rates, and other key terms that determine the total cost of your factoring arrangement.
Discount Rates
Discount rates typically range from 1% to 5% of the invoice value for the first 30 days:
Invoice Value × Discount Rate = Factoring Fee
Example: $10,000 × 2% = $200 fee
Rates are influenced by your invoice volume, customer creditworthiness, industry, and invoice payment terms.
Advance Rates
The advance rate determines how much of your invoice value you receive upfront:
• Typical range: 70-90% of invoice value
• Higher advance rates = more immediate cash but potentially higher fees
• Remaining balance (reserve) paid when customer pays invoice
The advance rate affects your immediate cash flow but not necessarily the total cost.
Additional Costs
Other potential costs to be aware of:
- Application or setup fees (typically $0-$500)
- Monthly minimum fees
- ACH or wire transfer fees
- Early termination fees (if applicable)
Factoring Cost Example
Understanding the total cost of factoring helps you make informed decisions about whether it's right for your business.
Example Calculation:
For a $50,000 invoice with an 85% advance rate and 2% discount rate for 30 days:
- • Initial advance: $42,500 ($50,000 × 85%)
- • Factoring fee: $1,000 ($50,000 × 2%)
- • Reserve amount: $7,500 ($50,000 × 15%)
- • Final payment: $6,500 ($7,500 - $1,000)
- • Total received: $49,000 ($42,500 + $6,500)
- • Effective cost: $1,000 on $42,500 for 30 days
Lendec's AI Advantage:
Our AI technology calculates the total cost of factoring for each provider in our network based on your specific invoice volume, customer payment patterns, and industry. This helps you compare different factoring options and choose the one that offers the best combination of advance rate, discount rate, and additional fees for your business needs.
Invoice Factoring Application Process
Our AI-powered platform streamlines the factoring application process for faster funding.
AI-Powered Matching
Our AI analyzes your business profile, invoice history, and customer payment patterns to determine which factoring providers are most likely to approve your application with favorable terms.
Document Upload
Upload your accounts receivable aging report, sample invoices, and business documents through our secure portal. Our system automatically organizes and verifies your documents to ensure a complete application.
Rapid Review & Approval
Factoring providers review your application and typically provide an approval decision within hours. Our platform tracks the status of your application and provides real-time updates.
Account Setup & Funding
Once approved and you've accepted the offer, the factoring company sets up your account and begins funding your invoices. Initial funding typically occurs within 24-48 hours via ACH transfer to your business bank account.
Invoice Factoring vs. Traditional Business Loans
When considering funding options for your business, it's important to understand how invoice factoring compares to traditional business loans. Each option has distinct advantages and considerations that may make it more suitable for your specific situation.
| Feature | Invoice Factoring | Traditional Business Loan |
|---|---|---|
| Approval Time | 24-48 hours | 2-8 weeks |
| Credit Requirements | Based on customer creditworthiness | Based on business credit score |
| Documentation | Minimal (invoices, aging reports) | Extensive (tax returns, financial statements) |
| Balance Sheet Impact | Sale of asset (no debt) | Creates debt obligation |
| Cost Structure | Discount rate (1-5%) | Interest rate (5-30% APR) |
| Funding Limits | Based on invoice volume (scalable) | Fixed amount |
| Collateral Required | Invoices only | Often business assets |
When to Choose Invoice Factoring
Invoice factoring is particularly well-suited for businesses that:
- Need funding quickly (within days rather than weeks)
- Have creditworthy customers but limited business credit history
- Experience cash flow gaps due to long payment terms (Net 30, 60, 90)
- Want funding that grows with sales volume
- Prefer not to take on additional debt
- Need funding for short-term opportunities or challenges
The Future of Invoice Factoring
The invoice factoring industry continues to evolve with technological advancements and changing business needs. Key trends to watch include:
- AI-powered risk assessment for more accurate pricing and higher advance rates
- Integration with accounting software for seamless invoice submission and tracking
- Hybrid products that combine features of factoring and traditional financing
- Greater transparency in pricing and terms
At Lendec, we're at the forefront of these innovations, using advanced AI technology to match businesses with the most competitive factoring providers and terms available in the market. Our platform continuously learns and improves to ensure you get the best possible funding options for your specific business needs.
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Get Matched NowFrequently Asked Questions About Invoice Factoring
Get answers to common questions about invoice factoring and how our AI-powered platform can help.
Related Resources
Factoring Calculator
Estimate your advance amount, fees, and total funding with our interactive invoice factoring calculator.
Try CalculatorFactoring vs. Invoice Financing
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Read ComparisonFactoring Success Stories
Read how other businesses successfully used invoice factoring to solve cash flow challenges and grow.
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