Invoice Factoring Companies by Industryįind an invoice factoring company that is knowledgeable within your industry. In many cases, businesses hate having to do the collections themselves. And unlike many debt collection agencies, factoring companies know the right way to collect from your customers and have decades of experience in collections in some cases. So, they focus on the collection efforts just as much as you would. When you enter into a factoring agreement with an invoice factoring company, you will soon understand that they feel more like a partner than a provider because once they purchase your invoices, they have a vested interest in getting paid by the account debtor. What you get from these companies is personalized service since it is their own money at stake. In fact, more than 68% of invoice factoring companies have net funds employed of less than $25 million according to a 2015 survey by the Invoice Factoring Association, IFA. While there are a few well-known players in the industry such as Fleet One Factoring, Bluevine, Riviera Finance and Apex Factoring, the majority of invoice factoring companies are mom and pops that have been funding small business for decades. Invoice factoring companies understand the needs of small businesses because they are typically small businesses themselves. Factors adjust their advance rates and fees to match the levels of credit risk they determine is appropriate for each account debtor.

The factoring companies don’t want to be left holding the bag in case the account debtor doesn’t pay. Obviously, the amount of the cash advance is dependent on the credit worthiness of the business’ customer (also known as the account debtor) as well as the amount the invoice has been outstanding and unpaid. This cash advance allows businesses the net working capital they need to run their day to day operations. The invoice factoring company will typically advance between 80%-95% of the invoice amounts, known as face value. So, after weighing the Pros and Cons, it decides to sell its outstanding invoices to an invoice factoring company. And in some cases, the business can’t afford to wait and require immediate cash flow for buying materials to fill an order, repaying debt or making payroll. The business doesn’t want to wait 30, 60, 90 days (up to 150 days in the medical industry) to get paid. The invoices come with payment terms which dictate how long the customer has to make good on its payment. In other words, the payment is not made up front for a variety of reasons. The invoices (also known as accounts receivable) are bills the business sent its customers for services rendered. Invoice factoring companies, sometimes called accounts receivable factoring companies, provide immediate funding to businesses by purchasing the businesses’ outstanding invoices. Now that you know the invoice factoring basics like what is factoring, its time to start looking at invoice factoring companies, or factors. The best part is the business doesn’t incur any debt for this financing. In fact, we scored many of the fintechs (see Fundera reviews, Kabbage reviews, Lendio reviews, Fundbox reviews and Bluevine reviews) on a variety of metrics.īut there is one type of business financing that’s been around for hundreds of years, factoring. With the advent of technology, new financial companies spring up almost daily. There has been tremendous growth in the specialty finance and alternative lending space over the last few years.

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