Unpaid invoices are part of running a business. It’s a frustrating and unfortunate reality for small business owners everywhere.
You rely on them to pay your bills, purchase inventory, and fund all of the other operational costs of running a business. But if your business has unpaid invoices and you’re low on cash, you need to consider invoice factoring.
What is invoice factoring?
Invoice factoring happens when your business sells qualifying unpaid invoices to a factor for upfront cash. You’ll typically receive anywhere from 70% to 95% of the value while paying a factoring fee until the invoice is paid.
Note: It’s not the same as a traditional business loan or business credit line.
If you’re interested in getting instant cash for your unpaid receivables, this guide will help you find the best invoice factoring company for your business.
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>> Compare QuotesThe 7 Best Invoice Factoring Companies of 2020
Invoice factoring can be a confusing topic to most small business owners. And with so many different companies to choose from, finding the best option for your organization can feel a bit overwhelming.
Fortunately, I’ve already done all of the research for you.
- BlueVine
- altLINE
- Triumph Business Capital
- Breakout Capital
- TCI Business Capital
- Riviera Finance
- Paragon Financial
I’ll give you an in-depth review of each company as we continue through this guide. This will help you find the best choice for your needs.
Best Invoice Factoring Companies Reviews
BlueVine
• Factoring lines up to $5 million
• Easy and flexible
• No long-term contract
• Apply quickly online
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BlueVine has delivered more than $2 billion in funds to 20,000+ customers. They’re one of the most popular and reputable invoice factoring companies out there.
They offer business lines of credit, business term loans, and of course—invoice factoring.
BlueVine offers factoring lines of up to $5 million. Factoring rates start at just 0.25% per week. The approval process is fast. For businesses that need cash right away, you can get approved in just 24 hours.
The funding process is easy and flexible. You’ll have the opportunity to get higher credit limits based on the strength of your customers. BlueVine’s fees are transparent, so you always know exactly how much the factoring will cost you. Instead of collecting recurring payments, they charge a weekly fee that’s due when the invoice gets paid.
You’ll have full control over what invoices get sold—only fund what you need without committing to a long-term contract.
Here’s how the process works:
It takes less than ten minutes to apply online. You provide a few basic details about your business, then the application approval process takes up to 24 hours.
Once approved, simply submit any unpaid invoices by syncing your accounting software or uploading them to your BlueVine dashboard.
BlueVine pays 85-90% of the cash instantly. You’ll get the rest of the money, less the BlueVine fee, once the invoice gets paid.
These are the minimum qualifications to get started with invoice factoring from BlueVine:
- Must be in business for at least 3+ months
- Your business generates $10,000 in monthly revenue
- You have a B2B company (invoices from traditional consumers aren’t eligible)
- Personal FICO score of 530+
You’ll also need to provide BlueVine some basic details about your invoices and show three months of recent bank statements.
altLINE
• Serving businesses 80+ years
• Direct source of funding
• Federally regulated bank
• 100% transparent
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altLINE has provided invoice factoring solutions for more than 80 years.
During that time, they’ve provided $424 million in funded invoices.
They’re especially unique because they’re a direct source of funding. They’re not a middle man. altLINE a division of the Southern Bank Company. So they don’t need to charge additional borrowing costs like third-party providers. Business owners can benefit from these savings.
In addition to invoice factoring, altLINE offers accounts receivable financing. While the two terms are often used interchangeably in the world of small business lending, they are not the same.
Invoice factoring offers great flexibility for business owners. Accounts receivable financing has stricter guidelines related to the credit profile. With that said, AR financing will usually provide businesses with preferred financing terms.
altLINE will deliver up to 90% of qualified unpaid invoices for factoring. Common industries for invoice factoring with altLINE include:
- Distribution
- Consulting
- Food and beverage
- Janitorial services
- Professional services
- Facility services
- Textile and apparel
- Wholesale
- Oil and gas
- Staffing
- Manufacturing
As a federally regulated bank, altLINE is 100% transparent about their fees and term structures. Factoring rates start at just 0.50%. You’ll also benefit from a fast approval process without an application fee.
In addition to invoice factoring and accounts receivable financing, altLINE also has asset-based lending for businesses. This is another way to borrow money against your receivables.
Triumph Business Capital
• Member of Triumph Bancorp
• Wide range of services
• Easy to use web portal
• Direct access to support
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The domain name for Triumph Business Capital is invoicefactoring.com. With a name like that, you better be a top invoice factoring company—and that’s exactly what they are.
Triumph Business Capital is a member of Triumph Bancorp, which is financial services organization that’s publicly traded. In addition to invoice factoring, they offer a wide range of other business and financial services like:
- Asset management
- Commuting banking
- Asset-based lending
- Equipment financing
- Insurance
This company has helped 7,000+ small and mid-sized businesses with working capital needs. They offer invoice factoring services for the following industries:
- Trucking
- Staffing
- Oil and gas
- Government contractors
- Freight brokers
I like Triumph Business Capital because of their easy to use web portal. The dashboard and process is a simple way to manage your funding. You can always stay up to date with your account and information, no matter where you are.
You’ll also have direct access to support from the Triumph Business Capital team.
Breakout Capital
• Unique invoice factoring service
• Customized solutions
• Easy approval process
• Great option for startups
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Breakout Capital has a unique invoice factoring service that they call “FactorAdvantage.” It’s a customized solution for businesses that don’t meet qualifications from other lenders and factoring companies.
FactorAdvantage is somewhat of a combination between invoice factoring and a small business loan. Here are some of the top advantages of this service:
- Fund receivables before invoices are ready to factor
- Increase your over-advance maximum amounts
- Access to short-term bridge loans
- Remove merchant cash advance programs or liens
- Forecast cash flow with AI technology
Breakout Capital is a great option for startups because they don’t have a strict approval process.
- No minimum FICO score
- No minimum monthly revenue requirement
- No minimum time in business
With all of that said, Breakout Capital’s invoice factoring rates are a bit higher than some of the other companies we’ve reviewed. Invoice factoring starts at 1.25% per month.
For startups that want to borrow up to $500,000 using unpaid invoices, Breakout Capital is a top company for you to consider. FactorAdvantage is unlike any other product I’ve seen on the market today.
TCI Business Capital
• Fast approvals
• Simple onboarding
• Month-to-month terms
• Same-day funding
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TCI Capital has been serving businesses for more than 20 years. They offer monthly funding lines from $50,000 to $10 million with invoice factoring.
B2B organizations that use TCI Capital for invoice factoring typically fall into one of the following categories:
- Staffing
- Telecom and wireless
- Heavy construction
- Renewable energy
- Government contractors
- Utility and pipeline contractors
- Trucking and freight
- Manufacturing
- Environmental services
- Oilfield services
TCI Capital adds a personal touch to their invoice factoring services. They encourage you to talk to a representative that will help you find the best solution for your current situation and needs. TCI Capital also ensures that the solution works well for your customers.
Like most companies, TCI Capital’s factoring fees are based on volume. So it’s a better option for those of you with higher volumes if you want access to preferred rates and fees.
The TCI Capital website has an awesome tool to help you calculate your factoring costs. Choose your desired advance rate of 70%, 80%, or 90%, and enter your average monthly sales.
Select your customer payment terms (net 30, 60, 90, or 120), and the tool will automatically calculate your fees.
For example, let’s say you average $10,000 per month with net 60 terms on your invoices. If you want 90% of cash in advance, the factoring fee is $200.
With TCI Capital, you’ll get fast approvals, simple onboarding, and month-to-month terms. They offer high advances and same-day funding to provide you with reliable cash flow.
Riviera Finance
• Guaranteed 24-hour funding
• Credit management services
• Online account dashboard
• Funding on demand
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Riviera Finance has been providing financial services to businesses since 1969. With more than 50 years of experience, this company is a top solution for invoice factoring.
Riviera Finance is great for any business that needs cash quickly They offer some of the quickest turnaround rates in the industry, with guaranteed 24-hour funding.
Riviera Finance is a non-recourse invoice factoring service. They also offer credit services and receivables management in addition to financing, all within the umbrella of invoice factoring.
Depending on your business type, industry, and clients, Riviera Finance will fund up to 95% of qualified invoices. You’ll have complete flexibility for funding on-demand.
Arguably the biggest standout of Riviera Finance is its credit management services. They guarantee the credit on all of your factored invoices. If an invoice is unpaid, Riviera Finance becomes the credit manager and assumes the risk.
As a result, no debt it created on your end, and the company protects you from bad debt on all of the invoices that they factor.
Riviera Finance has an exceptional receivable management system as well. They handle to the following tasks:
- Maintain an efficient process with your clients
- Automated invoice uploads
- Mailing and processing for all invoices
- Processing and posting of invoice payments
- Real-time alerts related to returns, disputes, or payment issues
- Check the status of outstanding invoices
- Custom management reports
You’ll benefit from instant access 24/7 to all of your account receivable information through an online account dashboard.
Paragon Financial
• Non-recourse invoice factoring
• Purchase order financing
• In business 25+ years
• Great option for startups
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Paragon Financial is another non-recourse invoice factoring company. So you can get funded without assuming the liability for unpaid invoices.
This institution is a bit smaller compared to some of the other companies on our list. They’ve been around for more than 25 years but only worked with 2,200+ businesses. With that said, they’ve funded more than $2 billion during that time.
It’s a great option for startups, entrepreneurs, and businesses with tax issues. They typically work with lots of government contractors.
To qualify for invoice factoring with Paragon Financial, you’ll need a minimum of $30,000 in monthly sales. This is a bit higher compared to other options that we’ve reviewed.
However, your personal credit won’t impact any approvals. Since Paragon assumes the risk, they make decisions based on the credit of your clients.
In addition to invoice factoring, Paragon Financial also offers purchase order financing and working capital for government contracting.
How to Choose the Best Invoice Factoring Company For Your Business
Invoice factoring can be complicated. It’s important that you find the right invoice factoring company to meet the needs of your business. You need to find one that services your company’s specific goals.
There are certain factors that you should look for when you’re evaluating an invoice factoring service. This is our methodology for narrowing down your options.
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>> Compare QuotesRecourse
What happens if one of your customers fails to pay an invoice to the factoring company? Depending on the company you choose, you could be responsible for this debt.
Recourse factoring typically offers lower fees. But this comes with higher risk.
Non-recourse invoice factoring means that the factor assumes the liability if the invoice goes unpaid. This is a better option for businesses who can’t risk a client withholding payment.
Flexibility
Some of you may only want to factor one or two invoices. Doing this on-demand is known as “spot factoring.” You’ll have complete control over which invoices are factored and when it happens.
Some invoice factoring companies require “whole ledger factoring.” In this case, you won’t have as much control. Generally speaking, spot factoring is the preferred choice for business owners.
Factoring Fees
Lots of business owners see the short-term benefits of invoice factoring—upfront cash. But they overlook the fees that this will cost.
Some invoice factoring companies lure you in with low factoring fees, but then hit you with additional fees like:
- Application fee
- Service fee
- Renewals
- Transfers
- Early termination
- Origination fee
I’d recommend an invoice factoring company that offers transparent pricing. You should only have to pay the factoring fee, without any of these additional charges or hidden fees.
Funding Time
How soon do you need cash?
For those of you who need funds quickly, look for an invoice factoring company with fast turnaround times. There are companies out there that will fund your business within 24 hours of submitting a qualified invoice.
Conclusion
Invoice factoring is generally reserved for B2B organizations. But there are still plenty of different niches and unique circumstances within that category. This list has an option for everyone.
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