If you operate a small business, then you are aware of the challenges you may be faced with on daily basis. Depending on circumstances, you may be faced with IT, employee management and marketing issues.
When all these issues and responsibilities add up, they can rob you of the attention that you need to develop your business. One of the hardest challenges you may be faced with is dealing with unpaid business invoices.
Chasing clients for payments is not only a scary experience but also time-consuming. From emails to making calls, making follow-ups to collecting invoices, all these things can take all the time you need to dedicate to your business.
Since this is a major issue with most companies, there are now companies called invoice factoring companies that can help get rid of the stress associated with collecting unpaid invoices.
Most importantly, these companies provide you with the cash flow you need to keep things running while waiting until your clients settle their invoices.
Table of Contents
- How Invoice Factoring Work
- 1. BlueVine
- 2. Paragon Financial
- 3. Riviera Finance
- 4. altLINE
- 5. Breakout Capital
- 6. Lendio
- 7. Fundbox
- 8. RTS Financial
- 9. Triumph Business Capital
- 10. P2Binvestor
- 11. Payability
- 12. American Receivable
- 13. Kabbage
- How to Choose the Best Invoice Factoring Company
- Frequently Asked Questions
How Invoice Factoring Work
Basically, invoice factoring companies take on your invoices at a portion of the total cost with additional payment given once the invoice is paid. Since they offer instant payments, you don’t have to wait for the invoice to be paid.
This ensures you have the working capital you need to run your company. It’s, therefore, a cash advance based on the total amount of invoices you expect to receive. They then follow up on your customers to make sure all invoices have been paid.
Their profit is the difference between what they pay you and what they collect in terms of invoices. But is engaging these companies worth it? Well, you need to know that cash flow is the backbone of any business.
Without enough cash flow, you can’t pay your business bills. So, while you may lose some money in the process, you gain a lot in the long run.
If you are interested in getting instant cash for your unpaid invoices, continue reading to learn about the best invoice factoring company.
If you are looking for an invoice factoring company with the most lenient requirements, BlueVine is the right option.
As compared to other companies, they’ve already provided up to $6.5 billion funds to over 125,000 customers.
As one of the most reputable and popular companies, they provide business term loans, business lines of credit and invoice factoring.
Featuring a fast approval process, if you need cash right away you can get your cash approved even within 2 hours.
Since the funding process is simple and easy, you’ll get a chance to get high credit limits depending on the kind of customers you have. Having transparent fees, you’ll get to know how much you’ll pay for the factoring.
While qualifications vary from one customer to another, their short payment terms and fast funding times will ensure that your business stays afloat during those difficult times.
If you have a good credit score and the best business credentials, you are likely to qualify for better terms with the company.
Once your customers pay their invoices, the payments will go directly to BlueVine. As compared to other companies, they allow you to keep control of your customers. This way, your customers will never realize that you are using a factoring company.
You’ll then get the remaining percentage once the invoice has been settled. However, if your clients fail to pay, you have to pay the company the amount of cash they gave you.
So if you have problematic customers, who won’t pay, this might not be the right company for you.
The best thing is that their invoice factoring is not long term. You are free to cancel it wherever you want. You can also choose to sync invoices from your business software or manually input them into your online dashboard.
BlueVine Fees and Rates
- Rates as low as 0.25% and
- Factoring line of up to $5 million
- Simple and easy application process
- Financing for various qualifications and needs
- Large funding amounts available
- Financially strong company
- Doesn’t provide their services in some places
- You are penalized for deadbeat customers
Paragon Financial is one of the best invoice factoring services for businesses that want to factor in between $30000 to $10 million.
Since they are willing to work with businesses faced with tax issues, they are the last resort for companies that are struggling to get invoice factoring. Within 24 hours of purchasing them, they will help fund up to 90% of your invoices.
Given that this is a very decent rate, you can always use them to boost your cash flow. Once they’ve received their payment they will deduct their fees and send you the rest of the money.
While their fee is between percent1.25 to %2 per month, this is not the worst rate in the market. Although you can factor up to %10 million with the company the invoices cannot be no more than 60 days.
Paragon works with small to medium-size businesses and helps them with tax problems. In addition, they work with Canadian and United States companies.
Since you must factor in $30000 per month with the company they are not suitable for companies that generate less revenue. However, unlike other companies, you are not tied to them. This means if you no longer need to factor your invoices you can cancel the contract.
They also provide a non-recourse factoring also known as credit protection. With this arrangement, if the customer does not pay you are not required to pay the invoice. Plus, they provide purchase order financing and government invoice.
Just like all factoring companies, this company does not have strict requirements for you to work with. However, they must check your customer’s creditworthiness before signing you in.
Paragon Financial Fees and Rates
- Credit facility is %30000 to $10 million per month
- Advance rate is 80%-90%
- Discount rate is typically 0.9%-2.5% per month
- Max overdue account is 90 days
- Additional fees vary depending on the business
- It has competitive rates
- Non-recourse factoring
- Lenient requirements
Higher cost than traditional financing
Boasting over 50 years of experience, Riviera Finance is one of the best solutions for invoice factoring.
Offering some of the quickest turn around rates with a 24-hour funding, they’re the best for any business that needs cash quickly.
As a non-recourse invoice factoring company, they provide receivable management, credit services and financing in the form of invoice factoring.
Depending on your business, clients and industry, Riviera Finance will provide up to 95% of qualified invoices. They will offer you with the kind of financing you need on demand.
The best thing about them is their credit management services. They guarantee that you’ll get credit on all your factored invoices. If your invoice is unpaid they become the credit managers and take the risk.
This means the company will protect you without putting any debt on your head. They have one of the best receivable management systems that take care of risks such as
- Automated invoice uploads
- Mailing and processing for all invoices
- Posting and processing of invoice payments
- Check the status of the invoices
- Custom management reports
Since they intend to maintain a close relationship with their clients they have over 20 fully staffed offices across Canada and the United States. As a non-recourse factoring company, you don’t have to re-purchase the invoice if the customer goes bankrupt.
Regardless of how long you’ve been in business, they will provide you with the financing services you need. The only businesses that they prohibit include businesses in the medical and construction industries.
Plus, they do not insist on any particular credit score thus making them the best option for small businesses, startups and businesses with fair credit.
Although they are very flexible, their contract terms state that you must be with them for at least 6 months.
Providing ease of application, once you fill up their application form they will preapprove it within 48 hours. However, it may take you up to 7 days before receiving your initial funds.
You’ll also be assigned a dedicated advisor who will ensure you are comfortable throughout the time you are with them. You can also reach them through live chat, telephone and email support.
Riviera Finance Fees and Fees
- Credit facility size is $5 to$2 million
- Advance rate is up to 95%
- Discount rate starts at $2%
- Max overdue account is 60 days
- The contract length is typically 6 months
- Provides non-recourse factoring
- You can personally meet your advisor
- You can get paid within 24 hours
- Provides immediate credit approvals
It’s not a very expensive funding
Having been in the market for over 80 years, altLINE is one of the best invoice factoring companies in the market today. Being a direct source of funding, they do not charge additional borrowing costs like other companies.
Apart from invoice factoring, they provide accounts receivable financing. While these two terms are used interchangeably in the world of business, they do not mean the same thing.
Unlike other companies, they deliver up to 90% of unpaid invoice factoring to industries such as consulting, distribution, facility services, professional services, wholesale textile and apparel among others.
As a federally regulated company, they are 100% transparent about their terms, structures and fees. In addition to their 0.50% factoring rates, you’ll enjoy a quick approval process without having to pay any application fees.
Apart from their accounts, receivable financing and invoice factoring, they also offer asset-based lending for businesses.
Like most companies, they always take into account the creditworthiness of your customers. They therefore do not use your credit score to determine whether they will work with you or not.
Whether your business is new or small they do not consider your profitability which is plus. It also overlooks how long you’ve been in operation.
Additionally, they don’t charge any application fee. You just need to ask for a free quote from their website to know about their rates. This process is not only simple but also straightforward hence something that can be completed within a few minutes.
Once you’ve applied, you’ll have to wait for 7 days for the approval to go through. While this is longer, the subsequent applications will be approved and advanced within 24 hours.
Since they have one of the best reputations, in case of anything, they will instantly come to your help. Apart from being friendly and helpful, they will provide you with different options to consider.
altLINE Fees and Rates
- Loan amounts are $30 to $50 million
- Advance rates up to 90%
- APR Range is 9% to 55% depending on individual fees
- Founding speed one to seven days
- Provides a wide range of loan amounts
- Low discounts of 0.50%
- Supported by a reliable banking institution
The payments do not come directly to you
Unlike other companies, Breakout Capital has a unique invoice factoring process known as factor Advantage. Customized for businesses that do not meet other lenders’ qualifications, they provide invoice factoring and small business loans.
Given that they do not have strict approval processes, they’re one of the best options for business startups. For instance, there is no minimum FICO score, no minimum time in business and no minimum monthly revenue requirement.
With this mind, their invoice factoring rates are a bit higher than other companies in the market today. As a matter of fact, their factoring rates start at 1.25%.
If you want to borrow up to %500000 using unpaid invoices, they are one of the best companies to consider.
All their business loans are meant to meet your individual needs depending on your situation. Once you apply they will evaluate your business to determine whether you qualify for their loans or not.
As compared to other business loans, FactorAdvantage comes with a few requirements. In case of any issue, you can contact them through email, phone and live chat.
In addition to this, you can check their official website for any additional resources. These basically include FAQs, posts and other articles related to what you are looking for.
Breakout Capital Fees and Rates
- The cost is 1.25% to 3.5% per month
- Repayment duration is weekly or monthly
- The funding amount is between $5,250 to $250,000
- Funding speed is 1 to 2 days
- They have good customer retention policies
- Provides matchmaking services if you don’t get a suitable product
- Refinanced loans are cheaper
Low term lengths
Lendio is one of the most reputable small business loan marketplaces. By connecting borrowers to over 75 lenders, they are one of the best loan providers.
They provide a factor rate which is as low as 5% and loan amounts of up to 80% of your receivables. To boost your chances of getting factoring you need to have $10000 per month revenue, 6 months of financial revenue and 550 or higher of credit score.
If your company meets all these requirements, it should be your go-to lending option. As a fast, easy and comprehensive platform, they’ve helped over 33,000 small business owners secure more $650 million in loans.
Best for businesses that value their time, this company makes the application process easier for you. You just need to fill in the online application for you to be matched with several lenders who want to finance you.
Since it does most of the work, you are given multiple offers so you don’t miss out on any good offer. If it’s your first time looking for alternative funding this is the right company for you.
It’s a company that minimizes and decreases the time and effort to secure funding. As compared to banks that turn down over 80% of their applicants, it provides 65% of the small business that apply to them.
Lendio provides several types of customer support offering service by online contact form, post and phone.
Apart from their customer support they have a dedicated small website that will provide you with guides and helpful tips. You can also find helpful information from their social media channels.
Lendio Fees and Rates
- Credit limit is $1000 to $500000
- Duration is 1-2 years
- Interest rate 8-24%
- Origination fee is by the lender
- Provides over 10 different types of loans
- Relaxed credit score requirements
- 1-7 of day of funding
- Personalized expertise and guidance
High-interest rates on some loans
If you are looking for the best factoring service for startups, Fundbox is the right option. Advancing 100% of the value of an invoice and having a few minimum requirements, they have everything that you need.
Since they do not consider the age of your business or your credit score, it’s the right company for new business owners.
Unlike other companies, they do not bombard you with prepayment penalties or monthly payments requirements. This allows you to repay your advances early.
They will also waive for you some fees if you are able to pay your advances early enough. The best of all, you don’t have to sign in lengthy contracts.
They also have a low minimum requirement that makes it the best financing option for startups that have poor credit and long credit. To apply, you must be based in the US and have a business checking account
Apart from these you must use supported accounting software with at least five invoices per month and two months of activity. One of the best things about them is that they support all industries including construction, healthcare and freight.
Another thing is that you do not require any personal guarantees or collateral. Although they do not consider the credit scores of your customers they may conduct a background check on your and business when you create an account.
Even with their requirements, you’ll enjoy up to 100% of invoice values. This makes it the best option for businesses that are too small to work with other companies.
Fundbox Fees and Rates
- Advance frees starts at 4.66%
- Credit facility size is up to $100000
- Advance rate is 100%
- Term length is 12-24 weeks
- Provides quick funding
- Does not charge early repayment penalties
- Straightforward application process
It does not work with other software such as QuickBooks and Freshbooks
RTS Financial refers to a non-recourse invoice factoring company that focuses on trucking and freight industry. Although they serve many companies, their main focus is these two industries.
This can clearly be seen in their equipment leasing, fuel card program and different trucking-related software. This makes it one of the best financing options for these companies.
Apart from their non-recourse factoring, they provide other related services. Once you factor an invoice with them they will advance you up to 97% of the total amount. As compared to other factoring companies this is a very good amount.
Another good thing about them is that they do not charge any hidden fees such as invoice upload fees, volume fees or ACH fees.
Although they don’t publish any fees for factoring the invoices if you are looking for more information about this you just need to talk to their customer support representatives.
Their trucking specific software is made in such a way that it will help you with all your trucking management services including factoring agreement.
Since they provide non-recourse factoring you’ll not be held accountable for anything if your customers fail to pay. While they do not have a monthly minimum requirement for trucking and Freight Company, they have a monthly volume of $150000 for a factoring agreement.
As opposed to other companies, you can’t apply for factoring on their website. You must contact their sales representative over the phone and tell them about your business and what you are looking for.
Besides the email and telephone support, they provide chatbot that you can use to connect with their customer support representative. Once you contact them they will get in touch with you quickly.
RTS Financial Fees and Rates
For more details on their fees and rates contact their customer service representative
- Offers mobile apps and web browsers to use
- They do not charge any minimum volume fees or invoice unpaid fees
- They have the best rates
You must contact the company to know about the rates
Triumph Business Capital is an invoice factoring company that specializes in both staffing and trucking factoring.
Although they are slow to fund, they are still among the top choices. When it comes to the overall interface, they are friendly and sleek. This makes it hard to compare them with other options in the market.
As one of the best companies, they’ve helped over 7000 plus small and medium-sized companies with the capital they need. They also provide factoring services for industries such as staffing, trucking, oil and gas, freight brokers and government contractors.
It’s also quite easy to use their web portal. Their process and dashboard will provide you with a way to manage your funding. Regardless of where you are, you can stay up to date with your information and account.
Moreover, they will provide you with access to their financial support and a range of other financial services including banking, asset management, insurance, and equipment financing.
With their sleek customer portal, you can keep track of fees and monitor the status of your invoices.
Because of their familiarity with the industry their experience might be a good fit given that they provide a better rate than most companies out there.
They will review your customer’s payment history. This means if you don’t have on-time collections you’ll still have a high chance of getting the funding.
Triumph Business Capital Fees and Rates
- Loan amounts are up to $20 million
- Advance rates up to 90%
- APR ranges from 13% to 55%
- Repayment terms paid only when invoices are paid
- Funding speed is within 48 hours
- The best for freight businesses
- Welcomes borrowers with low credit scores
- High advance rates
Long funding time
Commonly known as P2Bi, P2Binvestor refers to a peer to peer lender that provides credit to qualified B2B businesses. Founded in 2012, it eventually opened its doors to customers in 2014.
Previously all their credit were secured by invoices. To differentiate it from other companies, their products are not only simpler but also easier to use. Currently, their credit lines include inventories and account receivables.
Although they are not the only company that provides streamlined asset-backed financing, it targets a unique customer base. These include established businesses that are not bankable but require fairly large credit line.
To qualify for their funding, you must be an entity that makes at least $500000 every year. While it’s been in the market for a relatively short time, it has increasingly built its customer base.
If you are interested in an asset-backed line of funding and you are yet to meet the qualifications required it’s the right company for you. Their products are not only reasonably priced but also well rounded, convenient and transparent.
If they approve your application, you can withdraw funds provided the amount of money does not exceed your credit limit.
The fact that they look at your credit score does not mean they have a minimum score. Also, they do not provide their line of credit to industries such as real estate, cannabis, construction and medical insurance billing.
You can secure their lines of credit by inventory and A/R receivables. They also require a personal guarantee. The total amount of money you can withdraw is based on the value of your assets. Typically they can give you up to 80% of the value of your account receivables.
P2Binvestor Fees and Rates
- Borrowing amount is $250k to$10 million
- Term length is 1-year revolving
- Interest rates are high teens
- The origination cost is 1.5%
- APR is unknown
- Collateral personal guarantee
- Caters for the other left out businesses
- Provides the best customer service
- Can help if you don’t qualify for a bank loan
Strict qualification standards that can be hard to meet
If you are in business then it’s not uncommon to face financial issues. Slow payments in particular can affect and slow down your cash flow and have a bad effect on your business.
If this is the case, Payability is the right company. By helping you with the funding that you need, it will ensure that your company is not grounded because of money.
They provide funding to online marketplace sellers through two financial products namely instant advance and instant access.
Working like invoice factoring, Instance Access will provide you with daily payouts for all your marketplace sales. This means you don’t have to wait for a long time to get the money you’ve earned in sales.
With instant access, the company will purchase future sales and provide you with a quick lump sum form of payment. Although these financial products come at a cost, their fee structure makes it easy for you to understand what they are charging for their services.
For several years now they’ve helped many online marketplace sellers to develop and maintain their business and prevent them from collapsing.
The requirements that they need generally depends on the products and services you are looking for. However, for both products, you must be a seller in marketplaces such as Wal-Mart, Amazon among others.
Once your application has been approved you’ll have access to the cash within 24 hours. They will then add the sales to your bank account so you can transfer the balance to your bank account.
If you have any questions, you can contact them through phone or email. You can also reach them through your social media account where they will explain everything that you need to understand
Payability Fees and Rates
- Advance amount is 80% of daily receivables
- The fixed fee is 1% to 2% of gross sales
- Provides the best customer service
- Easy qualification
- The fast and easy application process
It may not be the best for all businesses
American Receivable is one of the best invoice factoring companies with fast approval and no monthly minimums. Founded in 1979, it has unique features and very solid requirements.
Their low fee and high initial per cent funded makes them one of the best companies in the market. Although this rate varies depending on the terms of contracts, you can rest assured that you’ll get the best funding with them.
Apart from small businesses and startups, it works well with several other companies. Since the customers are the ones who will owe them money, they consider their credit more than anything else.
As compared to other companies, they do not charge any application or account set up fee. This will save you money and ensure that you get the cash as fast as possible.
If you have limited capital it’s the right company for you. Most importantly, if you decide to stop working with them they will not charge you any termination fee.
Moreover, if any of customers don’t pay, they won’t require you to pay the invoice you’ve already sold. This not only minimizes any negative impact but also reduces the risk associated with other companies.
As compared to other companies, they do not have any strict requirements. They do not care how long you’ve been in business, your review and even credit score. Their main concern is the creditworthiness of your customers.
They also do not have an invoice minimum. You don’t have to submit a minimum amount of invoices every month. They only provide what you need when and when you need.
American Receivable Fees and Rates
- Credit facility size is up to $3million
- Advance rate is typically 85% to 90%
- Discount rate is 0.8% to2% per month
- Max overdue account is typically 60 days
- Contract length one-year commitment
- Best for startups and small businesses
- No credit score requirements
- Easy application process
- No monthly requirements
The long term contract is needed
Kabbage is an invoice factoring company that provides credit lines to companies that do not have enough cash flow.
Once your application is approved you have access hence can withdraw the amount at will. Since they have clear terms, there are no hidden fees
Regardless of the expenses that you want to cover they will provide you with the credit line you need. Founded in 2009 and designed specifically for small businesses, their sole aim is to ensure the companies get funding easily and urgently.
Their automated application system will quickly connect your business with the capital you need. You can also integrate your own systems with them so as to reach all your customers.
As one of the most promising invoice factoring companies, they will help you avoid the long application and complex approval processes associated with many businesses.
With their line of credit, you can fund small purchases and overcome slow seasons without interrupting your businesses. Once your money has been approved you’ll be able to draw directly to your business.
Apart from these features, you’ll qualify for perks including free financial help and service discounts.
If you want to create login credentials and connect to your bank account you’ll be required to provide all the details needed. As compared to other businesses, they consider a number of factors including how long you’ve been in business and your cash flow.
Kabbage Fees and Rates
- The total loan amount is up to $250000
- Minimum monthly revenue is $4200
- Age of business is 12 months
- Repayment terms are up to 18 months
- Fast approval process
- The cabbage card
How to Choose the Best Invoice Factoring Company
1. Know the Terms
Knowing the terms is a very important thing to consider when looking for the best invoice factoring company. A long term contract is only desirable if it includes flexible and price break rates.
You should, therefore, look for a company that can answer all your questions so you know what to expect when you engage them.
When looking for a factoring company, make sure you choose a flexible company. Some companies come with long term contacts, monthly minimums and pre-payment penalties. You should also choose one that allows you to decide the kind of invoice to factor.
You should avoid the ones that require you to factor all your invoices. If you do this they will be responsible for sending and collecting all invoices which may leave you as a spectator.
When searching for an invoice factoring company, you should go for one that has the experience of dealing with a company like yours. It should also have been in business for quite a period of time.
While the process is the same, some business may require different services from yours.
4. Customer Service
While determining this might be difficult, getting an invoice factoring company with strong customer service is very important. The company should be efficient and fast and do all that they promise to do.
Since they will be interacting with your customers directly they should be well mannered and treat them in the best way possible. One of the best ways to know this is to ask for referrals.
5. Technology They Use
Given that some companies make it hard for you to monitor your account, you need to ensure that you can always access your account to see what’s taking place. This is very important if you want to run your business effectively.
6. Approval Process
Factoring companies do have the way they approve their applications. The right company should provide you with ease of application. They should also be clear on how many days it will take to approve your application.
It’s very important to choose a reputable company that won’t let you down. You should ask yourself whether their current customers are satisfied or not.
Confidentiality is also a very important consideration when looking for the best invoice factoring company. So make sure you consider this when looking for the right company.
Frequently Asked Questions
This refers to an accounts receivable financing system meant for businesses that normally invoice other businesses so they can get immediate funding.
This mechanism is suitable for businesses looking for immediate cash to make large purchases or pay their bills.
Invoice factoring companies buy your clients invoices and collect them on your behalf. Once they’ve done this they pay you in two instalments. They first pay you 80% of the value and then 20% after the customers have paid the invoices.
These means you have to assign and transfer the invoices to them.
Invoice factoring is basically worth the cost for businesses that need quick cash. They are also suitable for businesses that do not have the capacity to collect invoices from customers.
But since its short term type of financing, they are not suitable for businesses looking for long term loans. If you are looking for long term financing, you may have to consider going for business loans.
Invoice factoring is best suited for your business if you are looking for money to resolve your cash flow issues. The only requirement that you need to have is qualified invoices. The company will then evaluate your invoices and confirm whether they are valuable enough.
When looking for the best invoice factoring company, you need to choose one with a few unnecessary fees. There are also other things to consider depending on the type of business you have.
Even if you have credit issues you can still qualify for invoice financing. If you are looking for one, consider the above options.