Invoice Factoring

In a factoring arrangement, you sell an invoice to the factor for 80–95% of face value. The factor then collects from your customer directly and remits the remaining balance less a fee to you once paid. Factoring provides immediate cash without adding debt to your balance sheet.

Factoring is most common in industries with long payment cycles, staffing, trucking, manufacturing, commercial services. It can be recourse (you buy back unpaid invoices) or non-recourse (the factor absorbs the credit risk). Non-recourse costs more but shifts customer default risk off your business.