What Is Invoice Factoring?

Invoice factoring is a cash-flow solution in which a business sells its receivables (invoices) to a factoring company at a discount in exchange for immediate working capital. Businesses use invoice factoring to improve their available cash for use towards payroll, expenses, or growth.

• When you are ready to fund, send your invoices to the factoring company.
• The factoring company advances you a percentage of the invoice value.
• Your customer pays the invoice to the factoring company on the agreed-upon terms.
• The factoring company pays you the remaining invoice amount less a fee for the service.

Does Invoice Factoring Create Additional Debt?
Unlike a loan, factoring does not create additional debt on your balance sheet.

Do I Have to Factor All of My Invoices?
No! With Scale Funding, you can factor some or all of your customers. For the customers you choose to factor, all invoices should be sent to the factoring company.

How much a factoring company charges is based on the monthly volume of invoicing sold to a factoring company. As your monthly sales improve and you factor in a higher volume of invoices, the factoring fees will go down.

How Are Factoring Rates Calculated?
There are three common factoring rate types; flat, tiered, and prime plus. Factoring rates are calculated based on several variables, including monthly invoicing volume, industry, and customer payment trends. See examples of factoring rates here.

What's Your Advance Rate?
We typically advance 90 percent of the invoice amount.

Scale Funding provides factoring to companies providing business-to-business sales and services. You must bill your customers on net terms and invoice at least $50,000 a month on average.

Once you speak with one of our factoring specialists and discuss your situation and cash needs, you will receive approval in as little as 15 minutes. Our simple setup process will have you ready for your initial funding in as little as three business days. After your initial funding, we will fund you the same day we receive your invoices.

Can a Start-Up Company Qualify for Factoring Services? 
Yes! Often, start-up companies cannot qualify for a bank loan or line of credit, so going with a factoring company is ideal.

With recourse factoring, any unpaid invoice that is uncollectible or in dispute is recoursed or sold back to the factoring client. With non-recourse factoring, the factoring company takes on the full liability of the invoice. Typically the advance rate is lower, and the factoring fee is much higher with non-recourse factoring.

Getting started with factoring is quick and straightforward. You'll begin by sharing some basic business details, a list of your customers, and copies of your open invoices. From there, we review your customers' creditworthiness, since repayment depends on them rather than your company's credit history. Once approved, we'll provide a clear agreement that outlines the advance rate, reserve, and fees, so you know exactly what to expect. After that, you can start submitting invoices and receive cash in as little as 24 hours.

What Are Your Terms?
Most factoring companies require a one-year contract, but at Scale Funding we offer month-to-month agreements, so you're never locked in a long-term commitment. We typically advance up to 90% of the invoice value upfront, then release the remaining balance (minus fees) once your customer pays. Fees are based on the size of your invoices and how long it takes for customers to pay, with no hidden charges. Best of all, you choose which invoices to factor and when, giving you complete control over your cash flow.

How Long Do I Have to Factor?
There is no long-term contract. We offer month-to-month financing programs based on your business needs.