- Building Your Business
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Factoring companies give you quick access to capital for your business's needs
By
Jeff White
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Jeff White
Jeff White is a business finance expert with experience starting and operating businesses of all sizes. He has started and operated his own businesses and assisted in the purchase and growth of several companies in the manufacturing, trucking, construction, and financial software industries. He holds a law degree from Purdue University's Concord Law School and an MBA from Baker College.
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Updated on December 22, 2022
Fact checked by
Michael Rosenston
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Fact checked byMichael Rosenston
Michael Rosenston is a fact-checker and researcher with expertise in business, finance, and insurance. Prior to this role, he interned at two Fortune 500 insurance companies and worked in data science in the advertising industry.
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We independently evaluate all recommended products and services. If you click on links we provide, we may receive compensation. Learn more. Invoice factoring is a great way to improve your business’s overall cash flow that sometimes becomes sluggish due to slow-paying customers. 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. It's an alternative form of financing. The best factoring companies will provide an advance fee of at least 90% and fund in as little as one day. Typically, you’ll wait 30 to 90 days for your customers to pay invoices, with 65 days being the global average. 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. To choose the best factoring companies, we evaluated over a dozen factoring companies based on their cost, speed, amount of funding, reviews from trusted third-party sources, and customer complaints. Here are our top picks. Best Factoring Companies Best Factoring Companies Frequently Asked Questions What Is Factoring? What's the Difference Between Factoring and Invoice Financing? How Do Factoring Companies Work? How Much Does Factoring Cost? When Is Factoring Worth the Cost? Methodology Why We Chose It altLINE is a part of The Southern Bank Company. It tops our list of invoice factoring companies because you can factor high volumes of invoices and receive an advance rate of up to 90%. The bank has factored over $800 million in invoices over more than 80 years. Since it's not a loan, there is no impact on your credit score, and it's not a qualifying factor. We chose altLINE because it is one of the most affordable options around and serves businesses in a diverse set of industries, making it a great option for almost any small business. Funds can be available within 48 hours of an invoice being generated too. Here’s a more detailed breakdown of altLINE’s invoice factoring option: Third-party customer reviews are largely positive with clients praising altLINE's service and fast response times. Even so, invoice factoring is not available for all business types and a long-term contract is required. Pros & Cons Pros Funding in as little as 48 hours Advance rate of up to 90% Factored more than $800 million in invoices Cons Not available for all business types Requires a long-term contract Why We Chose It RTS Financial might be your best option if you're in the trucking industry. It offers advance rates as high as 97% of your total invoice amount, and its familiarity with this specific type of business helps you get access to more capital faster. RTS Financial is the best for trucking businesses because of its ease of use and experience in the industry. The biggest downfall to the funding process is that you cannot apply online and must contact a representative to help you through the application process. If you want to get a general idea of your funding options without talking to anyone, this isn't a good fit for you. Here's a more detailed breakdown of RTS Financial's invoice factoring option: Customer reviews of RTS are mixed. Some customers report quick funding and a good customer support experience while others report problems with customer service returning calls and emails and frustration over hidden fees. Pros & Cons Pros Ideal for trucking businesses Receive up to 97% of total invoice amount No revenue requirements Cons Must connect with a representative to get funding options Customers report issues with support returning emails and phone calls Hidden fees Why We Chose It We chose TCI Business Capital as best for businesses with slow-paying customers because it provides an option for customers to change their discount rate every month, potentially lowering the percentage you’re paying throughout the life of each invoice repayment. This makes it a good fit for businesses needing the pricing to change every month because your customers may not pay very quickly. TCI Business Capital likes established businesses with a lot of annual revenue compared to the competition. Here’s a more detailed breakdown of TCI Business Capital’s invoice factoring option: The downside to TCI is that it only provides an advance rate of 60% to 90% of your invoice amounts. Most of the other factoring companies on our list advance more than 90% of the invoice amounts. Pros & Cons Pros Up to $10 million in funding Same-day funding available Customers can change discount rate every month Cons $50,000 in minimum factoring per month required Only advances between 60%-90% of invoice amounts Why We Chose It Riviera Finance has been providing financial services to businesses since 1969, making them a very established factoring option. Riviera also provides a guaranteed funding period of less than 24 hours after verification, which means you’ll never have to wait too long to get financed after you submit your next invoice. This helps make it our top pick as best for quick financing. Here’s a more detailed breakdown of Riviera Finance’s invoice factoring option: Unlike some of the factoring companies on our list, you'll have to reach out to a company representative to get qualification requirements. And even though its maximum fund rate of $2 million is impressive, the company will only advance up to 90% of your invoice amounts whereas some of the companies presented here will advance more than 90%. Pros & Cons Pros Guaranteed funding in as little as 24 hours after verification Up to $2 million in funding Company has longevity Cons Must speak to a representative for qualification requirements Why We Chose It Triumph Business Capital specializes in trucking and transportation factoring options, but it also has options for small- to mid-sized businesses of all industries, including staffing companies, which makes it our pick for that sector. Triumph offers same-day funding to some clients depending on their business and situation, and it will advance you up to 100% of your invoice amounts. Here's a more detailed breakdown of Triumph Business Capital's invoice factoring option: Unlike some of the factoring companies on our list, you'll have to reach out to someone for a host of information, including discount rate quotes as well as revenue and other qualification requirements. The company also doesn't specify its maximum funding amounts. Pros & Cons Pros Advances up to 100% of invoice amounts Funding available as soon as the same day Cons Must contact a representative for a discount rate quote Must contact a representative for qualification requirements No maximum funding specified Invoice factoring can be a difficult route for some businesses. You want to choose a factoring company that offers quick funding, solid advance rates, and good discount rates. We chose altLINE as our top invoice factoring company, but every business if different. Check out our list of the top invoice factoring companies and choose one that works best for your business's needs. Invoice factoring is an accounts receivable financing mechanism for businesses that regularly invoice other companies to get immediate financing for their unpaid invoices due within 90 days, instead of having to wait for their customers to pay. This funding option is best for businesses that have an immediate need for cash to pay bills or make a large purchase, such as inventory. This is not a long-term funding option because it can be expensive if customers take more than 30 days to pay their invoices. Many different industries use factoring, but the most common are staffing and trucking. These companies typically have a greater need for factoring because of the sheer amount of invoices they send out combined with their tight cash flows. If you invoice your customers for at least $20,000 to $50,000, factoring could be a good option for your business, regardless of industry. Both factoring and invoice financing provide immediate cash based on the value of your invoices. The major differences are who collects the invoices from your customers and how payments are made to the lender. With factoring, the factor or bank buys the invoices from your business and will end up collecting the payment from your customers. Invoice financing is more like a traditional loan that provides cash, using your uncollected invoices to determine how much they’ll lend you. You’ll still be in charge of collecting your customers’ payments, and you’ll make payments on the money you’re borrowing. With factoring, there is no payment due because the factor buys your invoices. Factoring companies will buy your customer invoices and actually collect them, if necessary, on your behalf. They will typically pay you in two installments, around 80% or more of the total value of the invoice upfront and then the remaining (after they’ve taken their factoring fees) after the invoice is paid to them by your customer. You’ll need to assign your invoices to the factoring company, which may reach out to your customers to discuss the invoices or collect payment. Factoring companies carry an APR range of 8% to 70%, but most companies will end up costing you between 25% and 40%. The total cost typically depends on the speed at which your customers pay the invoices. Many factors charge a fee of around 1% per week in addition to a factor fee of $1,000 to $5,000. The most affordable factoring options are pretty expensive compared to most long-term loans but can be a good short-term lending option, as it’s much more affordable than other options like business credit cards. Factoring is primarily worth the cost for two groups of businesses. First, businesses that need to receive cash quickly from their invoices to buy inventory or materials in bulk. Second, though much less common, businesses that can’t collect payments from their customers regularly. Businesses in need of long-term financing won’t find factoring as a viable option. Keep in mind that this is a very short-term benefit type of financing. Ari Brown, Principal at ClearThink Capital warns of this point, saying, “Factoring tends to have a limited period of benefit for 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. 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. We also considered reviews from trusted third-party sources and any complaints that have been openly voiced by customers.After considering all of these factors, we selected the seven best options. Article Sources Euler Hermes. "How Long Does It Take for Customers to Pay Invoices?" Newsletter Sign Up Newsletter Sign Up By clicking “Accept All Cookies”, you agree to the storing of cookies on your device to enhance site navigation, analyze site usage, and assist in our marketing efforts. The 5 Best Factoring Companies
Best Overall : altLINE
Maximum Funding Advance Rate Discount Rate Funding Speed Qualification Requirements Other Funding Options Not disclosed Up to 90% As low as 0.50% Within 48 hours Gross monthly sales threshold and more Accounts receivable funding Best for Trucking Businesses : RTS Financial
Maximum Funding Advance Rate Discount Rate Funding Speed Qualification Requirements Other Funding Options No official limit Up to 97% Contact for a quote As little as 24 hours No revenue requirements No other funding options Best for Slow-Paying Customers : TCI Business Capital
Maximum Funding Advance Rate Discount Rate Funding Speed Qualification Requirements Other Funding Options $10 million 60%-90% Contact for a quote Same day available No revenue requirements specified, minimum factoring of $50,000/month Payroll funding, A/R financing Best for Quick Financing : Riviera Financing
Maximum Funding Advance Rate Discount Rate Funding Speed Qualification Requirements Other Funding Options Up to $2 million Up to 90% Contact for a quote 24 hours after verification No revenue requirements, must speak to a representative for details A/R funding, loans, lines of credit Best for Staffing Companies : Triumph Business Capital
Maximum Funding Advance Rate Discount Rate Funding Speed Qualification Requirements Other Funding Options Not specified Up to 100% Contact for a quote As soon as same day No revenue requirements, no other qualifications specified Equipment financing, asset-based lending, fuel card program, more Final Verdict
Frequently Asked Questions
What Is Factoring?
What's the Difference Between Factoring and Invoice Financing?
How Do Factoring Companies Work?
How Much Does Factoring Cost?
When Is Factoring Worth the Cost?
How We Chose the Best Factoring Companies
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