Glossary
Selling invoices at a discount to receive cash now.
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Selling invoices at a discount to receive cash now.
A factor advances most of the invoice value immediately and collects from your customer, then pays the remainder less a fee.
It converts receivables to cash without a loan.
A $50,000 invoice may fund $42,500 now and the rest less fees on collection.
It suits B2B firms with large invoices.
A factor reads the customers rather than the seller: who owes, how reliably they pay and how concentrated the book is. A seller with a few strong, prompt-paying customers is a much easier factoring file than one with many slow or disputed accounts.
Factoring is not a loan against your credit. It is a sale of specific invoices, so your customers' quality matters most.
Sell a $20,000 invoice at an 85% advance and a 2.5% fee. You receive $17,000 now, and when the customer pays, the factor releases the remaining $15 percent less its fee, about $2,500 in total cost on the invoice. Compare that with the cost of an advance for the same time.
It is the sale of receivables.
See the related guides and the comparison pages, or apply and ask.
No. It is educational information, and agreements vary.
Educational information only. It is not legal, tax or accounting advice.
Same-day decision. Applying takes a few minutes and will not affect your credit score.
