What is invoice factoring?
Invoice Factoring: Selling your unpaid B2B invoices to a factor at a small discount so you get most of the cash today instead of waiting 30–90 days.
How it works
Invoice factoring is a funding tool where a factoring company advances you a percentage of an invoice (typically 80–95%) as soon as you issue it, then collects payment from your customer on the original terms. When the customer pays, you receive the reserve minus a small factoring fee. It is not a loan, so it does not sit on your balance sheet as debt, and approval is based mainly on the credit quality of your customers—not your credit score.
Where you will run into it
Invoice Factoring comes up most often in invoice factoring conversations. See how invoice factoring works, including real cost ranges and timelines.
Related terms
Advance Rate
The percentage of an invoice's face value the factor sends you upfront.
Reserve
The portion of an invoice held back until the customer pays.
Notice of Assignment (NOA)
The letter that tells your customer to pay the factor directly.
Recourse vs Non-Recourse
Who eats the loss if a customer never pays: you (recourse) or the factor (non-recourse).
Invoice Factoring questions
Selling your unpaid B2B invoices to a factor at a small discount so you get most of the cash today instead of waiting 30–90 days.
Invoice factoring is a funding tool where a factoring company advances you a percentage of an invoice (typically 80–95%) as soon as you issue it, then collects payment from your customer on the original terms. When the customer pays, you receive the reserve minus a small factoring fee. It is not a loan, so it does not sit on your balance sheet as debt, and approval is based mainly on the credit quality of your customers—not your credit score.
Funding Requirements Checklist for US manufacturers
See exactly what underwriters actually look at — for factoring, PO financing, equipment, working capital, ABL, and SBA — before you fill out a single application.
- What documents you need for each program
- Typical time-to-fund by program
- Common disqualifiers worth knowing up front
- How Manufactor Finance is compensated — $0 fees to you
Talk to a funding consultant
Questions before you apply? A consultant can walk through this checklist with you, no pressure and no obligation.
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