Invoice Factoring Cheat Sheet for Deal Brokers

Use this cheat sheet to quickly explain invoice factoring to your clients and help them understand the benefits and process.

What Is Invoice Factoring?

• A financing solution where businesses sell their unpaid invoices to a factoring company.
• Provides immediate cash flow instead of waiting for client payments.
• Used for payroll, expenses, and business growth.

How Invoice Factoring Works

1. Submit Invoices – Send unpaid invoices to the factoring company.
2. Receive an Advance – Get up to 90% of the invoice value upfront.
3. Customer Pays the Factoring Company – The client pays the invoice under the agreed terms.
4. Final Payment Minus Fee – The factoring company sends the remaining balance, deducting a small factoring fee.
5. A financing solution where businesses sell their unpaid invoices to a factoring company.

Key Benefits for Clients

• Immediate working capital
• No additional debt
• Approval is based on their clients’ credit, not theirs
• No long-term contracts required
• More consistent cash flow for operations

Factoring Costs & Rates

• Factoring fees vary based on industry, invoice volume, and payment trends.
• Types of rates: Flat, tiered, or prime-plus models.
• Larger invoice volumes often result in lower fees.

Recourse vs. Non-Recourse Factoring

• Recourse Factoring: The client is responsible for unpaid invoices.
• Non-Recourse Factoring: The factoring company assumes the risk (higher fees apply).

Common Client Concerns & Answers

• Does factoring create debt? – No, it’s the sale of invoices, not a loan.
• Do they have to factor all invoices? – No, they choose which clients to factor.
• Does factoring hurt their credit score? – No, and it may improve cash flow for on-time payments.
• Can they factor past-due invoices? – Up to 45 days old, in most cases.
• Will customers think they’re in financial trouble? No, invoice factoring is a standard business practice.

Who Qualifies

• Businesses that invoice $50,000+ per month
• Companies with B2B transactions
• Businesses that bill on net terms (30, 60, 90 days)

Why Use Invoice Factoring Instead of a Bank Loan?

• Faster approval – No long application process.
• Easier qualification – Based on client credit, not business credit.
• No interest charges – Just a factoring fee.
• No debt accumulation – Selling assets, not borrowing money.

Use this guide to confidently explain how invoice factoring helps clients improve cash flow and grow their business!