We looked at more than a dozen of the best factoring companies from all over the country to finalize this list, reviewing each based on factors such as cost, speed, and amount of funding. How We Chose the Best Factoring Companies While they do accelerate working capital receipt, after the initial receivable collection period expires, it provides little benefit.” If you’re searching for more long-term financing, you may want to consider other business loan options. Ari Brown, Principal at ClearThink Capital warns of this point, saying, “Factoring tends to have a limited period of benefit for companies. Keep in mind that this is a very short-term benefit type of financing. Second, though much less common, businesses that can’t collect payments from their customers regularly.īusinesses in need of long-term financing won’t find factoring as a viable option. First, businesses that need to receive cash quickly from their invoices to buy inventory or materials in bulk. Here are our top picks.įactoring is primarily worth the cost for two groups of businesses. We evaluated the best factoring companies based on the amount they will factor, their process, how much it will cost you, and the speed at which you can receive the money. If you pay a small fee, usually between 5% and 8% of the total invoice amount, a factoring company will give you the money upfront and you won't have to worry about collecting the money.

Typically, you’ll wait 30 to 90 days for your customers to pay invoices, with 65 days being the global average. The best factoring companies will provide an advance fee of at least 90% and fund in as little as one day. A factoring company will buy your invoices and provide more than 80% of their value upfront so you can fund payroll, buy inventory, or meet your other financial obligations. Invoice factoring is a great way to improve your business’s overall cash flow that sometimes becomes sluggish due to slow-paying customers. Read our advertiser disclosure for more info. We may receive compensation if you visit partners we recommend.

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Invoice factoring cost