Invoice Financing
Financing tied to outstanding customer invoices, commonly used by businesses that bill other businesses.
Program overview
Invoice financing advances funds against unpaid customer invoices. In factoring structures, invoices may be sold to the provider; in others, invoices serve as collateral.
How it works
- The business submits eligible invoices.
- The provider advances a portion of the invoice value.
- The remainder, less fees, is generally released when the invoice is paid.
Common uses
- Bridging long customer payment terms
- Funding payroll between receivables
- Growth without waiting on collections
Who may be a good fit
- B2B businesses with creditworthy customers and long payment terms
What you may need
- Accounts receivable aging report
- Sample invoices
- Business bank statements
- Business formation documents
Potential advantages
- Scales with receivables
- May be available to businesses with limited collateral
Potential drawbacks
- Fees accrue while invoices remain unpaid
- Customer notification may apply in some structures
Application process
- Provide an accounts receivable aging report
- Provider reviews invoice and customer quality
- Set up the facility and submit invoices
General qualification considerations
- Creditworthiness of your customers, not only your business
- Invoice age and concentration
- Business-to-business billing model
Alternatives to consider
Business Lines of CreditA revolving limit a business can draw from as needed, often used for short-term or recurring cash flow gaps.Working Capital FinancingShorter-term financing used to cover day-to-day operating needs rather than long-term assets.Revenue-Based FinancingFinancing repaid as a share of revenue or through fixed periodic payments tied to sales performance.
Frequently asked questions
Is invoice financing a loan?
It depends on the structure. Some arrangements are loans secured by receivables; factoring arrangements involve the sale of invoices. Review the agreement to understand which applies.
This is preliminary information, not an eligibility determination, offer, or approval. Final eligibility, terms, rates and approval are determined by the applicable financing provider.