Invoice Factoring — Same-Day Cash for Unpaid Invoices

Invoice Factoring at a glance

Typical amount

$10,000 – $5,000,000

Typical term

30 – 90 days per invoice

Factoring Fee

1% – 5% per 30 days

Minimum time in business

6 months

Minimum credit score

No minimum (based on your customers)

Common uses for a Invoice Factoring

• Payroll
• Supplier payments
• Growth without debt

How LendWorks matches you with a Invoice Factoring lender

1. Apply in about two minutes — no credit-score impact.
2. Our AI underwriting engine grades your file and matches you with a dedicated advisor.
3. Your advisor presents vetted Invoice Factoring offers side by side — you choose or walk away.

Invoice Factoring FAQs

What is a Invoice Factoring?

Invoice factoring converts outstanding B2B invoices into immediate working capital — the factor advances a percentage and collects from your customers.

How much can I borrow with a Invoice Factoring?

Typical funding amounts range from $10,000 – $5,000,000. Your exact offer depends on revenue, time in business, credit profile, and business performance.

What are the rates for Invoice Factoring?

Invoice Factoring typically runs 1% – 5% per 30 days. Your actual pricing depends on revenue, time in business, credit profile, and term — your advisor breaks down the real cost and total payback before you commit, so there are no surprises.

How long does it take to get funded with Invoice Factoring?

Funding timelines vary by product and lender — some options fund within a few business days, while larger or government-backed programs take longer. Your advisor gives you a realistic timeline for Invoice Factoring based on your documents and lender fit.

What do I need to qualify for Invoice Factoring?

Most lenders look for at least 6 months in business and a No minimum (based on your customers) credit score. Your advisor will assess your full profile.

Is Invoice Factoring right for my business?

Invoice Factoring fits best when you need payroll or supplier payments and can work with a 30 – 90 days per invoice term. If your timeline is longer or you can wait for a lower rate, your advisor may recommend an alternative — the goal is the right fit, not just the fastest approval.

How does LendWorks match me with a Invoice Factoring lender?

LendWorks runs your profile through AI underwriting to match you with a real advisor — not a lead form. Your advisor reviews your situation and presents options from our vetted lender network.

Does applying for Invoice Factoring hurt my credit score?

Checking your options with LendWorks does not impact your credit score. We use a soft pull to assess eligibility. A hard pull only occurs when you move forward with a specific lender offer.

Frequently asked questions

How does invoice factoring work step by step?

You submit an invoice (or batch of invoices) to the factoring company with the supporting documentation. The factor verifies the invoice is legitimate and the debtor (your customer) is creditworthy. The factor advances 80–95% of the invoice face value — often the same day — via wire or ACH. Your customer pays the invoice directly to the factor at the invoice due date. The factor remits the remaining balance to you, less a factoring fee (typically 1–5% of the invoice face value depending on the debtor's payment terms and creditworthiness).

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

With recourse factoring, if your customer fails to pay the invoice within the agreed window (typically 90 days), you are obligated to buy back the invoice from the factor or provide a replacement invoice. This means you bear the credit risk of your customers. With non-recourse factoring, the factor assumes the credit risk — if the customer becomes insolvent or files bankruptcy, the factor absorbs the loss. Non-recourse factoring is more expensive (higher discount rates) and typically covers only insolvency, not disputes or slow payment. Most small business factoring programs are recourse.

Will my customers know I am using a factoring company?

In a "notification" factoring arrangement, your customer is notified that the invoice has been assigned to the factor and is instructed to pay the factor directly — this is the most common structure. In "non-notification" or "confidential" factoring, the factor provides a custom lockbox under your business name and customers are unaware of the third party involvement. Confidential factoring is available from specialty factors but is less common and more expensive. For most businesses, notification factoring is standard and does not damage customer relationships when handled professionally.

How is invoice factoring different from accounts receivable financing?

These terms are often used interchangeably but describe slightly different structures. Invoice factoring involves the outright sale of invoices — the factor owns the receivable and collects directly from your customer. Accounts receivable (AR) financing (also called AR lending or an asset-based line of credit) uses your receivables as collateral for a loan — you retain ownership of the receivables and are responsible for collection. AR lending tends to be cheaper and more flexible for larger businesses, while factoring is more accessible for smaller businesses and those who benefit from outsourcing collections.

What industries commonly use invoice factoring?

Invoice factoring is most prevalent in industries with long B2B payment terms: staffing (payroll must be funded before client payment), trucking and freight (fuel and driver costs precede invoice settlement), construction (progress billing and retainage create cash flow gaps), manufacturing (production costs precede delivery and payment), government contracting (federal net-30 to net-60 terms), and healthcare (insurance reimbursement cycles of 30–90 days). Any business invoicing other businesses with net terms of 30 days or longer is a potential factoring candidate.

What fees does a factoring company charge?

Factoring fees are typically expressed as a percentage of the invoice face value, often called the "discount rate" or "factor rate" (not to be confused with the MCA factor rate). Rates typically range from 1–5% per 30 days, depending on the creditworthiness of your customers, your volume, and the industry. Some factors charge additional fees: a due diligence or setup fee ($500–$2,500), a wire transfer fee per advance ($25–$50), a minimum volume fee if you do not factor enough monthly, and in some cases, a lockbox or notification fee. Always request a fee schedule and model your all-in cost before signing.

Can I factor invoices from government clients?

Yes — government contract factoring is a well-established niche. Federal government invoices can be assigned under the Assignment of Claims Act, which requires the factor to notify the contracting agency and receive acknowledgment. State and local government assignments vary by jurisdiction. Government contracts often have longer payment terms (net-60 to net-90) but are considered very high credit quality, often resulting in favorable discount rates. Some factors specialize exclusively in federal contracting.

Does invoice factoring affect my ability to get other financing?

Factoring companies file a UCC-1 financing statement against your receivables as part of the arrangement, which appears on your business credit file. This does not necessarily prevent other financing, but it does put any potential lender on notice that your receivables are already encumbered. If you apply for an asset-based line of credit or another AR-secured product, the existing UCC lien may need to be subordinated or terminated first. It is important to disclose any existing factoring relationships when applying for additional financing.