Best Invoice Factoring Companies
Unpaid invoices are part of running a business. It’s a frustrating and unfortunate reality for small business owners everywhere.
You rely on those receivables to pay your bills, purchase inventory, and fund all of the other operational costs of running a business. If your business has unpaid invoices and you’re low on cash, invoice factoring will be a top solution for you to consider.
What is invoice factoring?
Invoice factoring is not the same as a traditional business loan or business credit line. 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.
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.
The 7 Best Invoice Factoring Companies of 2020
Invoice factoring can be a complex subject for small business owners who aren’t familiar with how it works. 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. These are the top seven invoice factoring companies for you to consider:
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 has delivered more than $2 billion in funds to 20,000+ customers. This is one of the most well-known and reputable online business lenders on the market today.
They offer business lines of credit, business term loans, and of course—invoice factoring.
BlueVine has 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.
I like BlueVine because 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.
In less than ten minutes, you can apply online. Just provide some basic details about your business and customers. The application approval process typically takes 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:
You’ll also need to provide BlueVine some basic details about your invoices and show three months of recent bank statements.
altLINE has been serving businesses for over 80 years. During that time, they’ve provided $424 million in funded invoices.
Unlike other invoice factoring companies on the market, altLINE is a direct source of funding. It’s a division of the Southern Bank Company. Since altLINE is not a middleman, 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:
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
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:
This company has helped 7,000+ small and mid-sized businesses with working capital needs. They offer invoice factoring services for the following industries:
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 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:
Breakout Capital is a great option for startups because they don’t have a strict approval process.
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
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:
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 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.
I’d recommend Riviera Finance to businesses that need cash fast. 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:
You’ll benefit from instant access 24/7 to all of your account receivable information through an online account dashboard.
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
As I said before, invoice factoring can be complicated. It’s important that you find the right invoice factoring company to meet the needs of your business.
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.
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.
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.
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:
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.
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.
With so many invoice factoring options to choose from, these are the top seven companies on the market today:
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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March 23, 2020 at 08:25AM