If you invoice other businesses, your cash is often trapped in receivables — you've done the work, but the money is 30, 60, or 90 days out. Invoice factoring and accounts receivable financing free that cash now, so you can make payroll, buy materials, and take the next job without waiting.
How it works
- You invoice your customer as usual.
- You get an advance, typically 80–90% of the invoice value, often within a few business days of approval.
- Your customer pays — and you receive the remainder, minus a small fee.
Factoring vs. A/R financing
With invoice factoring, you sell the invoice and the factor collects payment from your customer. With accounts receivable financing, you borrow against your invoices as collateral and still collect payment yourself. Both convert receivables into working capital — your advisor helps you pick the right structure.
Best for
- Staffing agencies waiting on client payments
- Trucking & freight companies (see trucking funding)
- Manufacturers, wholesalers & distributors
- Any B2B business with net-30/60/90 terms
Typical invoice factoring terms (2026)
| Term | Typical range |
|---|---|
| Advance rate | 80% – 90% of the invoice value |
| Factoring fee | 1% – 5% of the invoice value per month outstanding |
| Who's underwritten | Mainly your customers' payment history, not your own credit score |
| Business type | B2B or government invoices with net-30 to net-90 terms |
| Contract | Spot (single invoice) or ongoing; check minimum-volume and termination fees |
| Documents | A/R aging report, invoices, customer list, application |
Example: factoring a $40,000 invoice
| Example | Amount |
|---|---|
| Invoice (net-60) | $40,000 |
| Advance at 85% | $34,000 now |
| Fee at 3% per 30 days × 2 months | $2,400 |
| Remainder paid to you when the customer pays | $3,600 |
| Total you receive | $37,600 (6% of the invoice went to fees) |
Market ranges reviewed September 2026. Sources: NerdWallet: invoice factoring. Ranges are typical, not offers; your terms depend on the funding provider.