Don’t want to research 20 companies yourself? Answer 7 questions about your invoices and revenue and we’ll match you to the right factoring company for your industry — free, no hard credit pull. Start here →
What Invoice Factoring Actually Is
You do the work. You send the invoice. Then you wait 30, 60, sometimes 90 days for your client to pay. Invoice factoring solves that gap. You sell your unpaid invoices to a factoring company at a small discount. They advance you 80–95% of the invoice face value within 24–48 hours. When your client pays, they send you the remaining balance minus their fee.
No daily ACH. No personal credit minimum. Your clients’ creditworthiness matters more than yours. That’s why factoring works for businesses that banks won’t touch — new LLCs, businesses with prior defaults, owners with 550 credit scores.
For the full mechanics, see the Invoice Factoring Guide. This page is specifically about comparing companies and spotting the ones with hidden fees.
What Invoice Factoring Actually Costs
The discount rate is the headline number. But it’s rarely the whole cost.
| Fee Type | Typical Range | Watch For |
|---|---|---|
| Discount rate | 1–5% per 30 days | Flat fee vs. tiered (tiered gets expensive fast if client pays late) |
| Advance rate | 80–95% of invoice | Lower advance means more cash held back until client pays |
| Due diligence / setup | $0–$500 | One-time fee to verify your clients — ask upfront |
| Wire / ACH fee | $15–$35 per transfer | Adds up if you factor frequently |
| Minimum volume fee | Varies | Some require $10K–$50K/month or charge a shortfall penalty |
| Termination fee | $0–3% of contract value | Long-term contracts lock you in — ask about exit terms before signing |
Recourse vs. non-recourse — this matters more than the rate. With recourse factoring, if your client doesn’t pay, you buy the invoice back. With non-recourse, the factoring company absorbs the loss. Non-recourse typically costs 0.5–1% more. If your clients are reliable, recourse is fine. If you’re worried about defaults, pay for non-recourse.
Use the Invoice Factoring Calculator to run the real numbers on your invoices before you commit to any company.
6 Invoice Factoring Companies Compared
These are the companies that come up most often for small and mid-size US businesses. Rates shown are typical ranges — your actual offer depends on invoice volume, client quality, and industry.
- Advances up to 100% of invoice value (rare)
- No minimum monthly volume commitment
- Integrates with QuickBooks and FreshBooks
- Approval in hours, not days
- B2B invoices only (no consumer receivables)
- Flat fee can be high for slow-paying clients
- Among the lowest discount rates available
- Bank-backed — stable, no surprise shutdowns
- Serves most industries including staffing and construction
- Recourse factoring only (you buy back unpaid invoices)
- Slower approval process than tech-first platforms
- $8K+ monthly volume required
- Fuel advance program (immediate funds at the pump)
- Deep trucking industry expertise
- Load board integrations
- Trucking focus means other industries get less attention
- Contract terms can be rigid
- Non-recourse factoring available (they absorb client default risk)
- No long-term lock-in — month-to-month
- Works with startups and newer businesses
- Non-recourse costs extra
- Regional offices mean service quality varies by location
- True spot factoring — sell one invoice at a time
- No minimum monthly volume
- Good for businesses with seasonal cash flow gaps
- Spot factoring rates are higher than contract rates
- Not ideal if you need to factor regularly (contract works out cheaper)
- Industry-leading low rates for qualifying businesses
- Handles construction, staffing, manufacturing, services
- Fast same-day funding available
- $30K+ monthly minimum rules out smaller businesses
- Recourse factoring only
Not sure which one fits your situation? The right factoring company depends on your industry, invoice size, how often you factor, and whether your clients are creditworthy. Answer 7 questions and we’ll match you without the guesswork.
What the Comparison Sites Don’t Tell You
Most factoring comparison sites rank companies based on affiliate commissions. The company that pays more gets the top slot. Here’s what actually matters.
1. Minimum volume requirements are deal-breakers
If you factor $15K/month but the company requires $30K, you’ll pay a shortfall penalty every month. Ask before you apply: “What happens if I don’t hit the monthly minimum?” If they hedge or change the subject, that’s your answer.
2. Long-term contracts have real exit costs
Some factoring companies lock you into 12–24 month agreements. Leaving early means a termination fee of 1–3% of the remaining contract value. On a $50K/month contract with 6 months left, that’s a $1,500–$4,500 exit cost. Always ask about termination terms upfront.
3. Client notification is standard — but varies in how it’s handled
When you factor an invoice, your client gets a notice telling them to pay the factoring company, not you. This is normal and most business clients understand it. What varies is whether the factoring company handles that communication professionally. Ask to see their standard client notification letter before you sign.
4. The advance rate cliff
Some companies advertise 90% advances but reserve the right to drop that to 70% based on “client creditworthiness assessment.” If your biggest client is a smaller company with limited credit history, your advance rate could be lower than the headline figure. Ask specifically: “What advance rate would I get on invoices from [client name]?”
5. “Spot factoring” vs. “contract factoring”
Spot factoring means you choose which invoices to sell, when you want. Contract factoring means you commit to factoring a set volume every month (sometimes all your invoices with that company). Spot costs more per invoice but gives you control. Contract is cheaper if you have consistent invoice volume.
Who Actually Qualifies
Invoice factoring has almost no credit barrier on your end. What matters is your clients’ credit, not yours.
| Factor | Requirement | Notes |
|---|---|---|
| Invoice type | B2B or B2Government | Consumer invoices (B2C) generally not accepted |
| Client creditworthiness | Clients must be creditworthy businesses | Factoring company checks your clients, not you |
| Owner credit score | No minimum (most companies) | Some check but don’t require high scores |
| Time in business | Often 6 months minimum | Some accept startups with existing invoices |
| Monthly volume | $5K–$30K+ depending on company | Higher volume = better rates |
| Industries | Most B2B industries | Trucking, construction, staffing, manufacturing, services |
Already have outstanding invoices? You can often get your first advance within 48 hours of approval. The application process takes about 20 minutes. Start here →
Invoice Factoring vs. MCA: An Honest Comparison
If a lender is pushing an MCA on a business that has B2B invoices, something is wrong. Factoring is almost always the better product for businesses with reliable business clients.
✅ Invoice Factoring
- Annualized cost: 12–60%
- No daily ACH drain on your account
- Payment comes from your client, not your revenue
- No personal credit requirement
- Funding tied to invoice value — scales with you
❌ Merchant Cash Advance
- Effective APR: 40–350%
- Daily ACH withdrawals hit your account every business day
- Repayment based on your gross revenue — stacks badly
- Often requires 500+ credit score
- Fixed advance amount — doesn’t scale with invoices
If you’re currently in an MCA and have B2B invoices, factoring those invoices might be one exit path. See MCA Debt Relief for the full picture on exiting an MCA arrangement.
How to Choose the Right Company
Know your invoice profile first
How much do you invoice monthly? What’s your average invoice size? How long do clients typically take to pay? These three numbers determine which companies will even talk to you and what rate you’ll qualify for.
Decide: spot factoring or contract factoring?
If you have a consistent invoice flow and want the best rates, go contract. If your cash flow gaps are occasional and unpredictable, spot factoring keeps you flexible even though each transaction costs more.
Ask three specific questions before signing
One: “What is your minimum monthly volume and what happens if I miss it?” Two: “What are the termination terms if I want to leave early?” Three: “Is this recourse or non-recourse?” Any hesitation on these three questions is a red flag.
Compare total cost, not just the discount rate
A company charging 1.5% with a $35 wire fee on a $5K invoice costs more than a company charging 2% with no fees. Use the Invoice Factoring Calculator to run the actual numbers on your invoices before you decide.
Industry-Specific Factoring Pages
Factoring terms vary by industry. If you’re in one of these, the industry-specific guides have more relevant rate ranges and company recommendations:
- Invoice Factoring for Trucking Companies
- Invoice Factoring for Construction
- Invoice Factoring for Staffing Agencies