Revenue-based financing

Revenue-based financing for B2B services: steady billing, flexible payment.

Consulting, engineering, IT and business-service firms bill monthly and wait to be paid. Here is how a revenue-based advance fits that rhythm.

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How do B2B service firms use revenue-based financing?

Short answer: B2B service firms invoice monthly or at milestones on 30 to 60 day terms, carrying payroll and subcontractors in the meantime. A revenue-based advance provides working capital repaid as a share of client payments, so payments track the firm's actual collections rather than a fixed schedule.

Key facts

Invoices on 30 to 60-day terms
Payroll and subcontractors come first
Payments follow collections
Large clients are reliable but slow

How B2B firms earn

Business-to-business service firms usually invoice monthly or at project milestones, with payment terms of thirty to sixty days. Large corporate and public-sector clients are reliable but slow. The firm carries payroll and subcontractors in the meantime.

A revenue-based advance gives the firm working capital that is repaid as client payments arrive. Because the payment is a share of deposits, a month in which a big client pays late does not trigger a fixed payment the firm cannot meet.

What strengthens the file

A list of active clients and their payment history.
Signed contracts or master service agreements that show revenue continuing.
Consistent billing over at least several months.
Low reliance on a single client, or a long relationship where reliance is high.

Public-sector clients

Firms that bill federal, provincial or municipal governments often wait longer than private clients, especially at fiscal year-end. Government receivables are reliable but slow. Note the client and the typical payment time so a reviewer does not mistake a delayed government payment for a lost client.

Revenue-based financing or factoring?

If the need is tied to specific large invoices, invoice factoring advances against those receivables and is repaid when the client pays. If the need is broader, such as hiring ahead of a contract, revenue-based financing is simpler because it does not involve the client. Some firms use both at different times.

A worked example

Illustrative arithmetic: an IT services firm with $110,000 monthly deposits

Advance: $60,000. Repayment cap: $60,000 × 1.18 = $70,800.
Cost of the capital: $10,800, fixed in dollars from the start.
Payment: 7% of monthly revenue. At $110,000 a month that is $7,700, so about 9.2 months to reach the cap.

Every figure on this page is illustrative arithmetic in Canadian dollars. It is not an offer, a quote or a promise of approval.

Where Canadian files usually start

Monthly revenueTypically from around $20,000 a month in deposits for Canadian files. The exact line varies by funder and by file.

Time in businessTypically about 12 months. Newer businesses can be reviewed, but the options narrow.

Account healthLimited low-balance or negative days. Funders read the last few months of bank statements for this.

CreditScores from 500 are considered. A score of 600 or higher opens more options and better offers.

DocumentsA signed application and recent business bank statements, typically the last four months.

Existing advancesFiles with an existing advance can be reviewed, including second position.

Next step: apply once with a signed application and your last four months of business bank statements. The file is read for rBF for B2B service firms and matched to the structure that fits, whether that is revenue-based financing, a merchant cash advance or a smaller first advance that builds history. Questions first? Call (305) 384-8391.

Sources and review

Statistics Canada: Subjects (business and industry data)

Reviewed by the Merchant Fund Express team on October 12, 2026. Official pages checked as of that date.

Common questions

Does a government client help?

A reliable government client helps, but payment timing is read carefully.

Do I need contracts?

Statements are the core of the review. Contracts help explain future revenue.

Will my clients know?

No. Revenue-based financing is repaid from your account and does not involve notifying clients, unlike some factoring arrangements.