Our unbiased reviews and content are supported in part by affiliate partnerships. Learn more.

Invoice Factoring Reviews

buyers guide
Sort By
  • BlueVine Review

    Read Review Visit Site

    Highlights Invoice factoring Lines of credit Low entry qualifications No maintenance fees No lockbox fees No long-term contracts Fast time to funding Excellent customer service Overview BlueVine, an online lending service, was founded in 2013 after the founder watched his father, a physical therapist, struggle with inconsistent cash flow due to slow payouts by insurance companies. It […]

  • Riviera Finance Review

    Read Review Visit Site

    Highlights Invoice factoring Non-recourse factoring Startups okay Poor credit okay No startup fees No monthly minimums Friendly customer service Overview Riviera Finance has been offering invoice factoring services to growing SMBs in most B2B and B2G industries for almost 50 years. This factor currently serves over 1,400 clients and manages 20,000 customer accounts each month. With […]

  • P2Binvestor Review

    Read Review Visit Site

    Highlights Asset-backed lines of credit No draw fees No maintenance fees No lockbox fees Fast time to funding Transparent service Overview P2Binvestor, known as P2Bi for short, is a peer-to-peer lender that offers asset-backed lines of credit to qualified B2B businesses. The company was founded in 2012, before opening its doors to customers in 2014. […]

  • Fundbox Review

    Read Review Visit Site

    Highlights Invoice financing Lines of credit Young business friendly Low entry qualifications No origination fee No maintenance fee No lock box fee No prepayment penalty Fast time to funding Overview Fundbox is a business lender that specializes in offering financial products to small businesses. Founded in 2013, the company originally offered an invoice financing product (a […]

  • American Receivable Review

    Read Review Visit Site

    Highlights Invoice factoring Startup friendly No application fee No servicing fees No monthly minimums No non-utilization fees No early termination fee Quality customer service Overview American Receivable (not to be confused with North American Receivable Management Service, a debt collection service) offers invoice factoring services to B2B businesses. A quick glance at American Receivable’s homepage […]

  • Paragon Financial Group Review

    Read Review Visit Site

    Highlights Invoice factoring PO financing Non-recourse factoring Tax issues okay Startups okay High client concentration okay Competitive fees Responsive customer service Overview Paragon Financial Group is a business funder that offers invoice factoring and other financial services to eligible businesses. Founded in 1994, Paragon Financial Group has been in operation for over 20 years. This […]

  • Behalf Review

    Read Review Visit Site

    Highlights Purchase order financing Young business friendly Low entry qualifications No origination fee No maintenance fee Fast time to funding Overview Behalf (formerly called Zazma) is a business funder that offers financing to small- and medium-sized businesses. Similar to providers of purchase order (PO) financing, Behalf pays the bills for your goods and services; that way, your […]

  • Harper Partners Review

    Read Review Visit Site

    Highlights Invoice factoring Non-notification factoring available No long-term contracts No maintenance fees No lockbox fees Fast time to funding Transparent service Overview Harper Partners, so-named to communicate the company’s desire to be “a partner to your business,” offers invoice factoring to B2B businesses. This factoring service was created after founders observed the cash flow problems experienced by […]

  • Dealstruck Review

    Read Review Visit Site

    Note: Dealstruck is no longer originating new loans (though they are continuing to service borrowers who already have a loan). For lenders similar to Dealstruck, take a look at StreetShares or Fundation. Highlights Mid-prime business lender Term loans Working capital loans Asset based lines of credit Inventory lines of credit Competitive rates and fees Excellent customer […]

  • CapitalPlus Equity Review

    Read Review Visit Site

    Highlights Invoice factoring No long-term contract No application fee No lockbox fee No monthly mimimums No non-utilization fees No cancellation fee Helpful customer service Overview CapitalPlus Equity is a business funder that offers invoice factoring to qualified businesses. The company specializes in working with businesses in the construction industry but can work with businesses in other […]


What is Invoice Financing?

Invoice financing is a catch-all term to describe a number of business financing products that are backed, in some way, by unpaid invoices. These products can be useful for B2B businesses with slow-paying customers.

There are three types of invoice financing products: invoice factoring, a/r backed lines of credit, and non-traditional invoice financing.

What is Invoice Factoring?

In the past, the invoice factoring industry has had a reputation for being non-transparent and restrictive. However, in general, the practice of factoring invoices is useful for B2B businesses that are strapped for cash. Furthermore, while there are certainly a few bad eggs that contribute to the industry’s poor reputation, many factoring companies do not engage in dubious practices.

Invoice factoring is a relatively simple concept: you sell your unpaid invoices to a factoring company in exchange for money up-front. In most cases, the factoring company will give you 70% – 95% of the invoice value (the “advance rate”) up-front, and give you the remaining 5% – 30% (the “reserve”), minus a fee for their services, after your customer has paid the invoice.

Because the company is purchasing your invoices outright, invoice factoring is not technically a loan product. 

Invoice factoring can get complicated in the details, however. Although the general concept is the same, factoring companies might differ in regards to fees, contract term lengths, which invoices you’ll be required to factor, whether your customers know about the arrangement, and so on.

Here are common ways invoice factoring arrangements may differ:

Contract Term Lengths and Termination Notice

Some factoring companies require contracts of a certain length and charge fees for early termination; others do not require long-term contracts at all. It’s important to know what a potential factoring company requires in terms of contract length and termination notice.

Factoring All Invoices vs. Invoice-by-Invoice

Some companies require that you sell all your invoices, period. Some require that you sell all invoices from specific customers. Others operate on an invoice-by-invoice basis, which means you have control over which invoices you choose want to sell to the company.

Recourse vs. Non-Recourse

This determines who is responsible for paying if your customer defaults on the invoice. If you are in a recourse agreement, you are held liable for the unpaid invoice. If the agreement is non-recourse, the factoring company absorbs the loss. Because non-recourse arrangements are more risky for a company, they tend to cost a little more.

Notification vs. Non-Notification

Most customers have no problem with their unpaid invoices being sold to a factoring company. However, some businesses may not want their customers to know about the arrangement.

For a more thorough rundown of invoice factoring basics, check out this article.

What is an A/R Backed Line of Credit?

If invoice factoring isn’t flexible enough for your needs, you may be able to get an A/R backed line of credit instead. Unlike invoice factoring, A/R backed lines of credit are loans. The total amount you may be able to borrow is contingent on your invoices, but instead of selling them outright, the invoices are used as collateral.

Lines of credit may be useful for businesses that want a little more flexibility than invoice factoring normally offers. Borrowing is not tied to invoices, so you can choose exactly how much and when you would like to borrow capital. In addition, repayments are made over a set period of time, so you will always know exactly how much you are being charged for the service.

If you need a larger credit line, some A/R backed lines of credit can use other forms of contractual revenue, such as inventory or monthly recurring revenue, as collateral.

Other Types of Invoice Financing

In the past few years, some funding companies have developed variations on traditional invoice factoring or A/R backed lines of credit. Although the products differ in some ways, most are intended to provide flexible financing options, and carry fast, streamlined application processes.