Finimpact

Best Invoice Factoring Companies

Unpaid invoices tie up your cash flow and can restrict your business’ growth. You can also spend time and money trying to collect those invoices. Invoice factoring gives you immediate access to some of that money, so you can keep your business operating.

Best Invoice Factoring Companies
Paige Cerulli
Written by:Paige Cerulli
Business Content Writer

Businesses need continuous income to operate and grow, but unpaid invoices can create significant cash flow problems and restrict your business. Many businesses don’t have the staff time or resources needed to continuously follow up on outstanding invoices. When you work with an invoice factoring company, that company will do the hard work of getting those invoices paid. The company will also often offer you an advance on those balances, so you don’t have to wait to get paid. Our team of financial experts reviewed and ranked the top invoice factoring companies to help you get funded.”

Our Top Picks for Best Invoice Factoring Companies

credibly
  • Simple application process
  • As soon as same day funding
  • Open to high-risk industries
Credit Score
Min. Credit Score 500+
Loan Amount
Loan Amount $5K-$400K
Loan Repayment
Loan Repayment 6-18 months
lendio
  • Easy to apply
  • Product & lender choice
  • Competitive offers
Min. Credit Score
Min. Credit Score 560+
Loan Amount
Loan Amount Up to $500,000
Loan Repayment
Loan Repayment 1-2 years
fundera
  • Connections to multiple lenders
  • Competitive rates
  • Soft credit check
Credit Score
Min. Credit Score 550+
Loan Amount
Loan Amount $5K-$5M
Loan Repayment
Loan Repayment Up to 30 years

How To Choose Best Invoice The Factoring Companies?

It’s important to choose an invoice factoring company that’s right for your business. As you explore your options, you’ll need to consider multiple elements when weighing the pros and cons of each company and deciding if it meets your business funding goals and needs. Our experts used the following factors to rank the best invoice factoring companies.

  • Loan Features: What are the invoice factoring terms? How long will the company attempt to collect on your invoices?
  • Application process - How complicated is the application, and how much documentation do you have to provide? How quickly are applications approved, and when will you receive an advance?
  • Factor rates and fees - Are the company’s factor rates competitive? These rates can have a major impact on the money you collect, especially if that collection takes time. What percentage of your balance will the company offer as an advance?
  • Qualification process - Do you need a minimum credit score to apply? What other qualifications do you need to meet, like a business history, invoice balance amount, or invoice type requirement?
  • Customer support - Can you get help from a live customer service representative? Is multi-channel support available, and are there supplemental information and tools available to help you?
  • Online user reviews - What are other customers saying about the company on independent review sites like Trustpilot?

Best Invoice Factoring Companies - Full Overview


If you’re thinking about invoice factoring for your business, you’ll want to consider these top invoice factoring companies.

1. Credibly - Best for Poor Credit Scores

Credibly’s invoice factoring allows business owners to get capital for their invoice balances in just 48 hours. Business owners can get pre-qualified for up to $400,000. While most lenders will approve businesses for invoice factoring based on their clients’ payment history and credit scores, Credibly bases that decision on more than just credit. Credibly evaluates your business’ health, making this lender a good choice for businesses who have clients with lackluster credit ratings.

Pros
Approval based on more than just credit
Advances up to $400,000
Easy application: Takes 10 minutes
Approval in 1 day
Funding in just 48 hours
Cons
Factoring fees can be high: Up to 4%
Multi-step application process

Credibly has a multi-step application process. You’ll start by submitting some basic business information. Credibly reviews that information in as little as one day, and then reaches out with appropriate financing options. If you’re approved for invoice factoring, you can receive the full advance in your account that same day. Invoice factoring fees range from 0.5 to 4.0%,and Credibly is upfront with any fees that you might face. When evaluating your business for invoice factoring, Credibly weighs factors like the number of invoices you have, your industry, and more.

The Bottom Line

Credibly doesn’t base approvals only on credit scores, and instead takes a holistic approach to evaluating your business. The ability to receive funding the same day that you’re approved is an advantage for business owners who need money quickly.

Try Credibly

2. Lendio - Best for Fast Funding

Lendio’s accounts receivable financing funds up to 90% of a business’ receivables, and businesses can receive funds in just 24 hours after their approval. Approvals are based on multiple factors, including whether a business has reliable clients with a strong credit history and good credit rating. Since there’s no collateral required for this type of financing, it’s a practical option for many B2B businesses.

Pros
Get up to 90% of receivables
Get funding in just 24 hours
Loan terms up to 1 year
Factor rates start at 2%
Get offers from 75+ lenders
Easy application: Complete in just minutes
Cons
Upper factor rate range not disclosed
No information about advances

Lendio makes it easy to find the best accounts receivable financing offer for your business. The online application takes just minutes, and you’ll receive quotes from 75 or more lenders in Lendio’s network. Factor rates as low as 2% are available, and loan terms last for up to a year, maximizing your chances of getting the best return on your financing.

The Bottom Line

With the ability to get quotes from 75 or more lenders, Lendio offers versatile invoice factoring options. Funding is available in 24 hours, and applying is easy and takes just minutes, which is ideal for busy applicants.

Try Lendio

3.Fundera - Best for Exploring Multiple Options

Fundera works with many lenders, ensuring applicants will have invoice factoring choices. Fundera lenders offer up to 100% of the invoice value, and payments may be received in just one day. The result is that applicants get fast access to working capital. Fundera lenders offer both invoice factoring with somewhat flexible application terms, since the invoices serve as collateral.

Pros
Compare multiple quotes
Easy online application
Funding Advisor to answer your questions
Advances up to 100% of your invoice value
Payments in as little as 1 day
Cons
Factor fees can add up
Processing fee: Approximately 3%

Fundera offers a simple online application that’s easy to complete. A Funding Advisor will then contact you to help identify the funding product that’s best for your needs. Fundera’s technology matches you with the products that you qualify for, and your Funding Advisor will help you to explore, evaluate, and compare each offer. Fundera’s invoice factoring options have a processing fee of approximately 3%. There’s also a factor fee of approximately 1% for every week until your invoice is paid. The sooner your invoice is paid, the lower your fees.

The Bottom Line

With the ability to source quotes from multiple funders, Fundera makes it easy to explore your options. A Funding Advisor will help to guide you through the process, and will answer questions and help you perform detailed comparisons of your options.

Try Fundera

4. Kapitus - Best for Customer Service

Kapitus offers invoice factoring lines from $200,000 to $7 million, making it a practical choice for smaller businesses as well as for large-scale businesses and corporations. The application and underwriting processes take between five and 10 days to complete. Once you’re approved, you may receive funding within 24 to 48 hours. Kapitus offers a free financial matching tool that you can use to understand whether invoice factoring is right for you, and financing specialists are available by phone to help you explore your financing options.

Pros
Factoring lines up to $7 million
Factoring rates start at just 1.5%
Receive funding 24-48 hours after approval
Help is available by phone
Free financial matching tool
Cons
Clients need to have credit in good standing
Underwriting takes 5 to 10 days

Kapitus invoice factoring applicants will need to provide an accounts receivable/payable aging report. They will also need articles of incorporation or a partnership agreement, a personal or corporate tax return, and a personal or corporate financial statement. While Invoice factoring doesn’t pull applicants’ credit, your clients’ credit needs to be in good standing. During the underwriting process, applicants may need to provide additional documentation. Factoring rates start at 1.5%.

The Bottom Line

Kapitus offers factoring lines up to $7 million, making it a good choice for both small and large businesses. Factoring rates that start at 1.5% are competitive and could save you money, and you can speak with financing specialists by phone if you have any questions about invoice factoring or other financing options.

Try Kapitus

5. Rapid Finance - Best for Large Invoice Amounts

Rapid Finance’s invoice factoring features advance amounts that range from $20,000 to $10 million, so it’s ideal for multiple businesses and funding needs. A business’ clients need to have a history of on-time payments for an applicant to qualify for invoice factoring. Rapid Finance offers an online portal that applicants can access 24/7 throughout the invoice factoring process. Business advisors are also available by phone to help answer questions and provide guidance.

Pros
Advances up to $10 million
Positive online reviews: A+ with the BBB
Simple online application
Live business advisors available by phone
Cons
No information on funding time
No information on factor rates

Rapid Finance only requires a form of identity validation and unpaid invoices from a reputable creditor to apply. The online application is brief and simple, and once approved, funds are deposited into your business bank account. Dedicated business advisors are available to help you through every step of the invoice factoring process. Rapid Finance has an A+ BBB rating and a 5.0 Trustpilot score.

The Bottom Line

Rapid Finance offers advances from $20,000 to $10 million, so it’s a good option for many different businesses, including those with large-scale invoice factoring needs. The simple application is easy to complete and doesn’t require you to dig out lots of documentation before finding out if you’re approved. Rapid Finance also has a positive online reputation that indicates it may be a good choice for financing needs.

Best Invoice Factoring Companies

Company

Min. Credit Score

Min. Time in Business

Min. Annual Revenue

Loan Amount

Factoring Fees

Credibly

Not disclosed

Not disclosed

Not disclosed

Advances up to $400,000

0.5 to 4.0%

Lendio

Not disclosed

Not disclosed

Not disclosed

Not disclosed

2% and up

Fundera

Not disclosed

Not disclosed

Not disclosed

Advances up to 100% of invoice value

Approximately 1%

Kapitus

Not disclosed

Not disclosed

Not disclosed

$200,000 to $7 million

1.5% and up

Rapid Finance

Not disclosed

Not disclosed

Not disclosed

$20,000 to $10 million

Not disclosed

What Is Invoice Factoring?

Invoice factoring describes the sale of unpaid invoices to another company as a means to cover business obligations and address problems caused by slow-paying customers. In essence, lenders are buying those invoices from you, usually at a healthy discount, in exchange for cash. Once the bills are paid, the invoice factoring company gets paid the cash.

If a discount approach is not employed, the invoice factoring company charges a percentage-based fee on the aggregate amount of the invoices. Usually, it is applied upon receipt from the customer.

How Does Invoice Factoring Work?

When you apply to an invoice factoring company, you’re essentially selling your accounts receivable to that third party, with a promise to repay the fronted money, along with an additional fee, upon collection. This fee can be anywhere from 0.05% to 5.00% on average.

For example, if you sell $10,000 of invoices with a fee of 2.00%, you’ll pay $200 in charges, when you repay the outstanding balance. Some invoice factoring companies will chase the debts for you, while others expect you to handle invoice collection.

This type of funding is specifically designed for businesses that have cash flow issues, which oftentimes stems from late-paying clients. It enables organizations to stabilize their cash flows and continue operations as normal.

Most lenders will offer between 80.00% and 100.00% of the total value of your outstanding invoices. You should bear in mind that the percentage fee will be on the value of the total invoice, regardless of how much you borrow. For example, the factoring company may only lend you up to 80.00% of a $10,000 invoice and charge a 2.00% fee. This means you only receive an $8,000 loan but will be charged a fee of l $200, not $160.

Invoice Factoring Rates and Fees

Fees, interest rates, and charges for invoice factoring can be a little daunting to grasp, especially for newcomers. You’ll typically face the following costs:

  • Factoring fee - This is the percentage of your invoices that the factoring company will take as a total. On average, this ranges from 0.25% to 5.00%.
  • Processing or origination fees - This is a one-off charge at the start of your borrowing period, structured as a percentage of the total value of the pertinent invoices. This usually ranges from 1.00% to 3.00%.
  • ACH and bank wire fees - As funds will be moving between several different banks ( yours, your customers, and the factoring company’s accounts), you might be charged additional fees.
  • Monthly minimum fees - If your client still hasn’t paid up by the invoice deadline, you may be charged additional monthly fees, until you can pay off the full balance. However, this won’t always be the case, because, when it bought your accounts receivable, the factoring company assumed the risk of non-payment.

Which Businesses Can Benefit from Invoice Factoring?

  • Manufacturing - Manufacturing companies often need to buy supplies well in advance of being paid the final invoice for a finished product.
  • Companies with large amounts of inventory - Stocking up for seasonal demands, buying up new products, and having inventory on hand for emergencies requires cash. Lots of e-commerce and retail businesses use invoice factoring to get their hands on cash.
  • Transportation and logistics - Invoice factoring covers daily expenses like fuel and salaries, while you wait for your clients to pay you.
  • Staffing agencies - It can take several months for staffing agencies to get paid for placing new hires. Here, invoice factoring becomes an invaluable tool.

How to Choose the Best Invoice Factoring Company

  • Research all fees and charges - Costs vary significantly across lending platforms. So, it’s wise to thoroughly research your options, before making a final choice.
  • How quickly can funding be approved? - For companies looking for invoice factoring, time is often of the essence. Many lenders can provide funding within 24 hours, but you should shop around to make sure there will be no delays.
  • Lender reputation - A quick search on aggregate review sites or online reviews can give you an idea of the reliability of your preferred platform.
  • Ask questions - Many lenders encourage you to reach out with questions before you apply. This is a great way to gauge customer service.

Invoice Factoring Loans Pros and Cons

Invoice Factoring Pros

  • High rate of approvals - Credit scores and time in business aren’t so important here and invoice factoring has high approval rates
  • Fast access to cash - Approvals are fast and you can usually get funding the very same day or within 24 hours in most cases
  • Acceptance might not affect your credit score - Since the value of the invoices are the most important factor here, some agencies may not even need to perform a credit check
  • All financing is unsecured - The factoring company has shouldered the risk of any non-payment when it agreed to buy your receivables. This means all lending is unsecured and your assets aren’t at risk
  • Open to most small businesses - You usually don’t need to be making significant amounts of cash each month to be eligible and many small businesses find they can qualify

Invoice Factoring Cons

  • Loss of invoicing control - In most cases the factoring company will take control of your invoicing. This leads to a small reputational risk and can make it harder to keep track of clients
  • 1% - 5% of all invoices will go to the factoring company - Like any other form of lending, invoice factoring comes with a cost. Make sure you can afford the hit in order to manage your cash flow

Final Thoughts

Invoice factoring is a fast, safe, and simple way to secure funding for businesses that struggle with cash flow. If you’re still wrestling with a funding dilemma, why not head over to one of the platforms on our list? You’ll find some impressively low factor charges, lenient eligibility requirements, and a variety of flexible lending options to consider.

Remember to strive to ascertain the total amount of fees charged by different lenders. Also, take care to identify the proportion of your invoices you can borrow against each lender. Doing so will help you to optimize your invoice factoring experience.

Frequently Asked Questions (FAQ)

Does invoice factoring require a credit check?
Whether invoice factoring requires a credit check depends on the funder. Most funders put more emphasis on your clients’ credit and payment history, but some funders do consider an applicant’s credit, too. To increase your chances of approval, submit invoices from clients who have a good history of paying on time.
Is invoice factoring right for your small business?
Invoice factoring allows you to get working capital quickly and improve your cash flow. Invoice factoring can be ideal if you have a lower credit score, since most of the emphasis is on your clients’ credit history. Invoice factoring can save you time and overhead on your collections process, and since your invoices serve as collateral, you don’t have to worry about putting other collateral down, like you may be required to do with a loan.
Is invoice factoring worth it?
It’s important to consider whether invoice factoring is right for your situation. If your clients have poor credit scores, you might not be approved. Factor rates will reduce the amount of each invoice that you collect, and even if a factoring company buys your invoices, that company can’t guarantee that they will be able to collect outstanding invoices. You’ll need to weigh the pros and cons and consider the value of your outstanding invoices to decide if invoice factoring is worth it.
What's the Difference Between Factoring and Invoice Financing?
There are a few key differences between invoice factoring and invoice financing. When you use invoice factoring, you sell all of your outstanding invoices, and the invoice factoring business approaches your clients to collect on those invoices.. With invoice financing, you can pick and choose which outstanding invoices you want to sell, and when. You retain more control over the process and can approach your clients to collect on those invoices. The ability to engage with your clients can help to maintain and improve client relationships.
How do you qualify for invoice factoring?
While qualification requirements for invoice factoring differ between funders, in most cases, you’ll need to be a business that is located and operating in the United States. You will likely need to be a B2B business that sells to other businesses. Most funders also require that your invoices pay on 30, 60, or 90 day terms, and that your funders have a good history of making payments on time.
How much do invoice factoring companies charge?
Invoice factoring companies charge several fees that can affect how much you will make off of your invoices. Invoice factor fees can range from approximately 0.5% to 4%. The company will charge you that percentage of your invoice balance while your invoices remain unpaid, so the longer it takes to collect payment, the less money you will receive.

Invoice factoring companies also charge advance rates, which often vary depending on the industry your business is in. The company will give you a percentage of your invoice up-front, and that percentage depends on how risky it is to collect on the invoice’s balance. Advance rates can range from 60% to more than 90%.

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About the Author

Paige Cerulli

Business Content Writer

Paige Cerulli is a content writer and copywriter who specializes in business, finance, pet, and health topics. An entrepreneur herself, Paige enjoys writing about topics that help business owners to make well-informed strategic decisions.

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