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Factoring Companies Pay Immediate Cash for Invoices
Eliminate the waiting for customer payments with cash flow from America's top factoring company

What is a Factoring Company?

Factoring companies are an excellent source of cash flow for small and mid-size companies. Factoring supplies the cash businesses use to meet payroll, manage expenses, and grow.

Invoice factoring, also referred to as accounts receivable factoring, is an alternative to traditional bank financing. Instead of getting a loan or line of credit, businesses with customers that pay on extended terms, sell their invoices to a factoring company, and receive an immediate cash advance. This simple transaction provides money that is used as needed.

How does the Invoice Factoring Process Work?

Invoice factoring begins when a business completes its work and generates an invoice. Rather than sending the invoice to it’s customer, the company sends the invoices to the factoring company. From there, the factoring company purchases the invoice and directly deposits the advance into the business’s bank account within 24 hours or less. Generally, the advance is around 90 percent. Once the end customer pays the invoice, the factoring company pays the remaining balance, less a small fee.

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Why Companies Use Factoring

  • Invoice factoring is a source of consistent and reliable cash flow. Instead of waiting weeks or months for customer settlements, companies using invoice factoring have cash available to meet their financial obligations.
  • It is a challenge for start-ups and emerging companies to qualify for traditional financing from banks. Companies in this situation use factoring because eligibility is based upon the credit and payment history of their customer.
  • Factoring is flexible. Companies can use factoring for a short or long period of time. Factoring fees are volume driven and the more invoices a company factors, the lower the cost. As a company grows, increasing the factoring line is easy.

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How to Choose a Top Factoring Company

All invoice factoring companies supply cash to their clients. What separates one from another are the advances, factoring rates, contracts, and services each offer. When choosing a factoring company here are some considerations to keep in mind.

  • Industry Experience: First of all, make sure the Factor has a record of serving other businesses in your industry.
  • Advance Rate: Advance rates range from 80% to 90% depending on the industry and payment terms.
  • Factoring Fees: This is the cost of factoring. Monthly volume, payment terms, and length of contract are used to determine factoring fees.
  • Contract Length: Factors offer contracts for month-to-month funding or longer-term agreements. Select the type of deal that fits your long-term needs.
  • Additional Services: Some Factors provide other services to clients including credit review of potential customers, AR management, online reporting, and more.

Why Choose Scale Funding

Since 1994 Scale Funding has served companies in the United States with factoring programs customized to fit the specific needs of each client.  We are rated one of the best factoring companies in the United States, because we provide funding to businesses in 24 hours or less, along with superior customer service. Our factoring lines range from $50,000 to $10MM, giving businesses flexibility and room for growth. For a free, no-obligation consultation and factoring quote, complete the form below, or call (800) 707-4845.

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Learn more about invoice factoring and factoring companies from Scale Funding.

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