Sell your unpaid B2B invoices to a factor for an immediate cash advance, minus a discount fee. Underwriting weighs your customers' credit more than yours — a rare on-ramp for younger or thinner-credit businesses with real B2B receivables.
$50,000 invoice, 90% advance rate, 3% flat discount rate, customer pays in 45 days
Why this matters: The $1,500 cost of capital on $45,000 advanced for 45 days works out to roughly 27% effective annualized — cheaper the faster your customer pays, more expensive the slower they pay.
Illustrative figures only — actual approval, amount, and pricing depend on lender review of the full file.
| Product | FICO | Time in business | Revenue |
|---|---|---|---|
| Invoice Factoring | Not heavily weighted | 3+ months | $10K+ B2B AR per month |
Invoice Factoring: Customer creditworthiness matters more than yours.
Invoice Factoring
May also be requested: Master service agreements, Articles + UCC search results
Situation: $120K biweekly payroll obligation against invoices billed to enterprise clients on 45-day terms.
Typical match: Recourse factoring facility against the top 3 client invoices — approval hinged on those clients' commercial credit, not the agency's thin operating history.
Speed: Facility live in 4 business days; first advance funded same day invoices were submitted.
Situation: Fuel and driver payroll cash-flow gap while waiting 30–60 days on freight-broker invoices.
Typical match: Non-recourse factoring on freight-broker-verified loads — a standard structure in trucking where factors maintain broker credit files across the industry.
Speed: New loads factored within 24 hours of delivery confirmation.
Situation: $200K working capital gap created by a new automotive-tier customer's 90-day payment terms.
Typical match: Spot factoring on the automotive-tier invoices only — kept the rest of the AR book unencumbered for a future bank line.
Speed: Approval in 3 business days; funded within 48 hours of invoice submission.
Illustrative scenarios drawn from the lender partner network — not specific customer data.
These industry pages surface Invoice Factoring in their typical product mix.
Invoice factoring sells your outstanding business-to-business invoices to a factoring company for an immediate cash advance — not a loan against them, a sale of them. The factor pays you most of the invoice value up front, collects payment from your customer on the invoice's normal terms, and releases the remainder (minus its fee) once that payment lands.
It exists to solve a specific, common problem: a business can be profitable and have real, collectible revenue on the books, but still run short on cash because customers pay on 30-, 45-, or 90-day terms. Factoring converts that future payment into cash today.
On a $50,000 invoice at a 90% advance rate and a 3% discount rate, you'd receive $45,000 within 24–48 hours, then the remaining $3,500 (the $5,000 reserve minus the $1,500 fee) once your customer pays.
Recourse factoring (the more common, cheaper structure) means you're on the hook to buy back an invoice the factor can't collect. Non-recourse factoring shifts a defined slice of that risk — typically customer insolvency or bankruptcy, not just late payment — to the factor, and costs more because the factor is pricing in real credit risk it can't push back to you.
Most small-business factoring is notification factoring — your customer is told to pay the factor directly, and the factor typically verifies the invoice with them before advancing. Non-notification (confidential) factoring exists but is rarer, harder to qualify for, and usually reserved for larger, more established AR books.
Factoring is one of the few financing products where your personal credit and time in business matter less than who owes you money. Network-typical minimums run 3+ months in business and $10,000+ in monthly B2B invoices to creditworthy commercial customers — a real opening for younger businesses that can't yet qualify for a line of credit or term loan.
Factoring wins when the capital gap is specifically tied to a receivables cycle — you've billed the work, the customer owes real money, you're just waiting on the calendar. A line of credit requires time-in-business and revenue history factoring doesn't; an MCA prices against your own bank deposits rather than your customers' payment reliability, which usually makes it more expensive for a business with strong B2B receivables.
Three terms matter most: whole-ledger vs. spot factoring (whether you're required to factor every invoice with that provider or can select individual ones), minimum volume commitments (some contracts penalize you for factoring less than a set monthly minimum), and early termination fees (confirm the exit cost before signing a multi-month agreement).
No. Factoring is the sale of your accounts receivable to a factoring company for an immediate cash advance — the same structural category as a merchant cash advance's receivables purchase. That's why it's priced with a discount rate rather than an APR.
Recourse factoring — the more common, cheaper structure — requires you to buy back an invoice the factor can't collect. Non-recourse factoring shifts a defined slice of that risk (typically customer insolvency, not just late payment) to the factor, and costs more because the factor prices in real credit risk.
In most small-business factoring arrangements, yes — this is called notification factoring, and your customer is directed to pay the factor directly. Non-notification (confidential) factoring exists but is rarer and typically reserved for larger, more established AR books.
Factoring is one of the least credit-score-driven products available — underwriting centers on your customers' creditworthiness and payment history, not primarily yours. A thin or short personal credit file rarely disqualifies a factoring application on its own.
Initial facility setup typically takes 3–5 business days (customer verification, UCC search). Once live, individual invoices fund in 24–48 hours after submission.
Factoring is the sale of the invoice — the factor owns it and typically collects payment directly from your customer. Invoice financing (asset-based lending against AR) uses your invoices as collateral for an advance while you retain ownership and keep collecting from your customers yourself.
Yes — factoring is one of the few financing products genuinely available to very young businesses, as long as you have real B2B invoices from creditworthy commercial customers. Approval is based primarily on who owes the money, not how long you've been in business.
See your Invoice Factoring options — start an application
Editorial disclaimer: This page is for educational purposes and is not financial, legal, or tax advice. Rates, fees, qualification requirements, and product availability are illustrative ranges that vary by lender, market conditions, and individual business profile. ClearValue Lending is a funding platform; all financing is subject to lender partner approval and terms. Actual approval, amount, and pricing depend on lender review. ClearValue Lending is compensated by the funding lender on closed transactions.