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Best Invoice Factoring Companies
Amid growing economic uncertainty, some businesses are finding it increasingly difficult to access cash. For many B2B companies, the best solution is invoice factoring or the sale of unpaid invoices. This form of financing offers numerous advantages, especially for businesses that need money quickly but aren’t able to secure a conventional bank loan. Factoring enables you to take better control of your finances, pay your employees on time, and take advantage of any investment opportunities.
Top Factoring Companies for April 2024
eCapital
Fortunly's Rating: Our editorial team determines the rating based on a set of evaluation criteria developed for each product and service category.
eCapital has a long history of providing factoring services to small and mid-sized businesses. It offers reliable, uninterrupted funding with high advance rates. Through strategic partnerships and proprietary technology, the company provides its clients with more money quickly, while giving you more control over your capital. eCapital raises up to 90% of the customer’s invoice value, with repayment terms of up to 90 days. In addition, it provides cash flow solutions designed for most types of business funding.
- •Initial funding within 48 hours
- •Same-day funding for onboarded clients
- •Up to 100% advance rates on invoices
Gateway Commercial Finance
Fortunly's Rating: Our editorial team determines the rating based on a set of evaluation criteria developed for each product and service category.
Gateway Commercial Finance offers a compelling choice for businesses seeking flexible, fast, and transparent invoice factoring solutions. With competitive rates, a broad spectrum of financial services, and a customer-first philosophy, Gateway stands as a strategic partner for businesses aiming to navigate financial challenges and capitalize on growth opportunities.
- •Rapid funding time
- •Unique factoring needs
- •Advanced A/R management platform
- •High advance amounts
Porter Capital
Fortunly's Rating: Our editorial team determines the rating based on a set of evaluation criteria developed for each product and service category.
Porter Capital was founded in 1991, and has recently surpassed $10 billion in funding provided to businesses across the US. The company is a direct lender, offering both industry-leading invoice factoring rates and solutions, with advances going up to 90% on individual invoices. All in all, Porter Capital stands out as a great choice for anyone looking for a quick and personalized service with low factoring rates.
- •World-class customer service
- •Trusted company
- •Low rates
- •Offers flexible solutions
Triumph Business Capital
Fortunly's Rating: Our editorial team determines the rating based on a set of evaluation criteria developed for each product and service category.
Founded in 2004, Triumph Business Capital offers various financial products to its clients, including asset-based lending, equipment purchasing, and insurance. The company is among the leading trucking and freight factoring companies. More than 7,000 businesses have already used its services, with many applauding the company’s polite and knowledgeable team. Invoice funding with this lender is suitable for both small and large businesses. The company also offers recourse and non-recourse invoice factoring.
- •Fast application process
- •Offers both types of invoice factoring
- •Knowledgeable and polite team
- •Various financial products
- •Tracks the status of your order on any device
Breakout Finance
Fortunly's Rating: Our editorial team determines the rating based on a set of evaluation criteria developed for each product and service category.
Breakout Finance differs from other factoring companies because it offers a unique solution for selling accounts receivable. Its blended product, Factor Advantage, works with both invoice factoring and business loans. Customers praise the provider’s low credit score requirements and extremely polite customer support. The company’s agents are also trained to give financial advice, so you can get the best support while choosing the right type of funding for your business needs.
- •No credit score required
- •Responsive customer support
- •Various financial products and tools
altLINE
Fortunly's Rating: Our editorial team determines the rating based on a set of evaluation criteria developed for each product and service category.
altLINE is a financial department of The Southern Bank created specifically to offer commercial loans. With loan amounts going up 90% and rates starting as low as 0.75%, it falls within the industry’s standards. What makes it stand out among other factoring companies is the monumental reputation of its parent bank, which has nearly 90 years of experience. If you’re looking for a reliable lender, altLINE is the way to go.
- •No credit score requirements
- •Decades of experience
- •Low rates
Scale Funding
Fortunly's Rating: Our editorial team determines the rating based on a set of evaluation criteria developed for each product and service category.
Scale Funding (formerly TCI Business Capital) is one of the most reliable factoring companies in the US. The minimum revenue requirement remains slightly higher than standard, but it does have a couple of great features to offer. For example, you can get fuel discounts for your trucking business, fund your account in a number of different ways, and check out your customers’ credits.
- •Quick funding times
- •Free customer credit checks
- •Fuel card program
Riviera Finance
Fortunly's Rating: Our editorial team determines the rating based on a set of evaluation criteria developed for each product and service category.
It’s always good to stumble upon a factoring company that isn’t too demanding about your customers. Riviera Finance will accept invoices no matter how overdue they are, which is a big plus. Even some of the biggest factoring companies on the market can’t offer that. In addition to that, the company will loan you up to 95% of the invoiced amount with no requirements for credit score or years in business. These are just some of the main reasons why Riviera might become your favorite option.
- •Higher than average loan amount
- •Accepts long-overdue invoices
- •Covers all of US and Canada
RTS Financial
Fortunly's Rating: Our editorial team determines the rating based on a set of evaluation criteria developed for each product and service category.
RTS Financial lacks transparency in terms of pricing and fees when compared to some of the other factoring companies on our list. But aside from this little inconvenience, there are so many other things to like here. For instance, not only does RTS Financial help you with your day-to-day cash flow needs, but it also provides you with an exceptional desktop and mobile phone app that you can use for any crucial trucking-related tasks.
- •Industry-high advance rates
- •No ACH or invoice-uploading fees
- •Excellent multi-purpose app
Best Factoring Companies - Our Picks:
eCapital - Tailored toward small and mid-size businesses
Gateway Commercial Finance - Low factoring rates
Porter Capital - Flexible solutions
- Triumph Business Capital - Recourse and non-recourse factoring
- Breakout Finance - No penalties for paying off debt early
- altLINE - Fees as low as 0.75%
- Scale Funding - Three-day funding time
- Riviera Finance - Accepts long-overdue invoices
- RTS Financial - Excellent multi-purpose app
What to Know Before Applying for Invoice Factoring Services
Many B2B companies that sell goods and services rely on invoice factoring to secure capital. Instead of waiting for up to 90 days to get paid by clients, businesses sell their unpaid invoices to a factoring company. In most cases, businesses get between 75-80% of the invoice value. The money is often used for salaries, new investment opportunities, and other expenses.
The factoring company never pays the full invoice amount because there is always a risk that your clients may never settle their debts, and it also charges a certain percentage fee for its service.
Although the entire process looks simple, there are some things you should know before using invoice factoring for your small business.
What Is the Difference Between Invoice Factoring and Invoice Financing?
When looking for quick access to cash, business owners have two options: invoice factoring or invoice financing.
These services are similar in that you get cash in advance for your unpaid invoices. But there is an important distinction between the two.
Invoice factoring is a financial transaction, while invoice financing is a type of loan. With the former, you sell your invoices, so the factoring company waits for your clients to pay off their debts. With the latter, you use your invoices as collateral. Once your client pays off the debt, you can pay off the loan.
What’s Better: Non-recourse Factoring Companies or Recourse Factoring Companies?
Most factoring companies offer one of these two types of services: recourse and non-recourse. The difference between them comes down to who pays the invoice in case your customer doesn’t.
With recourse factoring, you’re responsible if your customer doesn’t pay the debt. This type of factoring is best for businesses that have reliable clients who pay their bills on time. With non-recourse factoring, your factor absorbs the unpaid invoices. This usually means that the factor charges higher fees and takes invoices that might be covered through credit.
How We Evaluate Invoice Factoring Companies
Invoice factoring is widely used by many businesses. Wholesalers, freight brokers, and many B2B companies use factoring services for different reasons. Some need the money for rent, utility bills, and paying salaries. For others, invoice factoring is the fastest way to get cash for investment opportunities.
Numerous online lenders act as factoring firms. In order to identify the best invoice factoring providers, we evaluate each of the companies thoroughly based on the following criteria.
Application Process and Funding Time
One of the best things about factoring firms is that you can complete the whole application process in less than a day. Aside from your personal details and information about your company, you don’t need to offer any additional data. Some companies will check your credit score and ask if you have a driver's license, but that’s it.
You can complete the entire process online, and that’s why we look for sites that are easy to navigate and have a clear UI. We also check to see if you can submit your application using a mobile device. Integration with your accounting software is also a great option to have so you can transfer invoices automatically.
Finally, factoring companies should be capable of quickly transferring the money into your account. It usually takes one business day, but the best providers can complete the whole transaction in 10 minutes.
Flexibility
In most cases, the lender will allow you to choose which invoices you want to factor, but there are exceptions. Some lenders might demand that you sell all invoices from a particular client. Also, a lender may request invoices from a certain time period or limit the number of invoices you can sell.
Payment and Discount Rates
Our list includes providers that offer the best price for your invoices. There are no factoring companies that pay the full amount for invoices, but the good ones offer up to 99% of the invoice value. Meanwhile, discount rates range between 1% and 6%. The final amount depends on numerous factors, like how long it takes your client to pay off the debt.
Contract Length
Another thing to keep an eye out for is the length of the contract. Different factoring companies offer different contracts. In most cases, these are monthly or annual subscriptions.
Other Financial Products
While reviewing the companies, we take note of some of the other services they provide. The largest factoring companies offer small business loans, lines of credit, and other financial products. Some specialize in offering financial advice to clients, while others provide different tools for monitoring and improving your credit score.
Security
Lastly, we examine the level of security. Online factoring can be a risky process if you are doing it through companies that can’t guarantee privacy, safeguard your personal details, and ensure secure transactions.
Further Reading
FAQ
How much does a factoring company charge?
Factoring companies charge fees that usually range between 1% and 6%. The fee depends on numerous factors, including the time your clients need to pay the invoices and the amount owed.
Is invoice factoring a loan?
No, invoice factoring is not a loan. It’s a financial transaction where you sell your invoices at a discount. The key advantages of this type of transaction is that you get a lump sum of money instantly, and your factor needs to wait for your clients to pay the debt.
What are types of factoring?
The majority of factoring companies offer recourse factoring. That means you are fully responsible if your clients don’t pay the invoice. With non-recourse factoring, which is rare, the factor absorbs the unpaid invoices.
Is invoice factoring a good idea?
Generally, if you have reliable clients that pay regularly, invoice factoring is not a problem.
In fact, factoring invoices can be beneficial for your business. Since invoice factoring is not a loan, you are not required to put forward any collateral, and unlike with other financial services, you don’t need to have an excellent credit score. Invoice factoring companies are also ready to give you flexible repayment terms if there isn’t any real risk of your clients not paying.