Invoice Factoring vs. Merchant Cash Advance (MCA)
MCAs get pitched to manufacturers constantly because they close fast. For a B2B shop that invoices on terms, they're almost always the wrong tool—and often the most expensive money in the market.
The quick answer
If you invoice B2B on 30–90 day terms, factoring is dramatically cheaper than an MCA on the same receivables. MCAs make sense for cash-in daily retail; they rarely fit a manufacturer.
Side by side
| Invoice Factoring | Merchant Cash Advance | |
|---|---|---|
| Effective APR | 10%–30% | 40%–150%+ |
| Repayment | When your customer pays | Daily or weekly ACH debit |
| Amount | Grows with invoices, unlimited | Fixed lump sum, usually $10k–$500k |
| Term | Revolving | 3–18 months |
| Approval basis | Customer credit quality | Bank statement deposits |
| Stackable? | Not usually needed | Yes, and often stacked to disaster |
| Renewal pressure? | None | Constant refi pressure |
When Invoice Factoring is the right call
- You issue B2B invoices with net terms
- You want cost tied to actual funding cost, not a fixed factor rate
- You need capital that scales with orders
- You want to keep balance sheet debt low
When Merchant Cash Advance is the right call
- You have no B2B invoices to factor
- You've exhausted every other option
- You have a truly short-term, one-time cash need with no other collateral
Bottom line
If you're in an MCA today, we routinely refinance them into factoring facilities and cut effective cost by two-thirds or more. Call us before you sign a new advance.
Frequently Asked Questions
Other comparisons
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