Invoice Financing (or factoring)

Get cash flow by using unpaid invoices as collateral.

Get immediate funds without waiting for payment terms.

Up to 100% of the invoice value

No personal credit requirement

Funded within 24 hours

Low documentation

Rates as low as 0.5% per month

What Is Invoice Factoring?

Invoice factoring, or invoice financing, allows you to borrow money from a lender using unpaid invoices as collateral.

Factoring is a flexible business financing option that instantly lets you receive cash based on your outstanding accounts receivables. A lender will provide you with an upfront payment of up to 100% of the total value of the invoice. Any remaining balance is paid to you once the invoice clears.

Since invoice factoring is based on the credit history of the invoiced business, there are no personal credit requirements. Invoice factoring is a great way for small businesses and startups to get immediate cash for late and unpaid invoice payments.

Benefits of Invoice Factoring

Online invoice factoring has made it easier than ever for small business owners to access working capital quickly. Factoring isn't technically a loan like a traditional bank loan — it's an upfront cash advance on your unpaid invoices.

Instant Access to Capital

Get a quick cash infusion without debt or giving up business equity. This allows you to cover any cash flow issues or pursue growth opportunities. We'll go through the application process to ensure you get the funds you need in as few business days as possible.

Serve as Collateral

Your accounts receivable are the collateral. No additional collateral is needed to secure invoice financing.

Transparent Rates and Terms

Transparency is critical to understand your discount rate. Your Wize adviser makes understanding your factoring fee and payment terms simple and clear. We walk you through the factoring process and ensure no hidden fees.

High Approval Rate

Wize compares 75+ factoring companies to identify the lowest factor rate possible. We then walk you through the pros and cons of each provider to help you make the right decision.

No Personal Credit Requirement

Approval for invoice financing is based on the creditworthiness of the business you have outstanding invoices for. As such, a credit check isn't required, and there are no personal credit score requirements. Business eligibility for invoice factoring services is typically high.

How Does Invoice Factoring Differ From a Business Loan?

Factoring isn't a traditional small business loan — it's alternative financing through the sale of an asset (the invoice amount or receivable). Essentially, the factor is purchasing the right to collect on an invoice or receivable when it's paid for a fee.

Because financing companies are counting on your customers to pay, they're more concerned with your customers' credibility. Invoice factoring companies can collect payment directly or indirectly from your customers. Factoring could help your business get working capital upfront if your business has creditworthy customers.

Factoring providers generally offer recourse or non-recourse factoring. With recourse factoring, it's up to your company to settle the debt with your customer if an invoice is unpaid or late. With non-recourse factoring, the factoring company absorbs the debt of the unpaid invoice or late payment. This will be clarified in your invoice factoring agreement.

The goal is for your business to receive operating capital while waiting for customer payments. Factoring is common in certain industries, such as trucking, staffing, and wholesale.

How Is Factoring Used To Improve Cash Flow?

Immediate funding from invoice financing can be used to grow your business. Here are the most common ways business owners use financing:

Buying or leasing new equipment

Payroll and taxes

Operating expenses

Hiring new employees

Opening a new location

FAQs about Invoice Factoring

Want to know more about invoice factoring? You're not alone. Here are simple answers to common questions from business owners like you.

How does invoice factoring work?

Accounts receivable are paid to a third-party company. The outside company works directly with customers to collect any due payments. After paying the factoring company, the business receives funds minus additional fees for the services.

How are invoice factoring and invoice financing different?

The distinguishing factor is who's responsible for collecting payments from customers. With invoice factoring, businesses outsource debt collection to a third-party source, known as a factor. With financing, the business owner is responsible for dealing directly with customers to ensure invoices are paid. This form of financing relies much more heavily on your direct customer relationships.

What are the Pros of invoice factoring?

The main benefit of using this method is to free up cash flow. Factoring provides quick access to funds. You can optimize working capital that would otherwise be tied up while waiting for customers to make payments.

However, at Wize, we strive to provide you with funding whether you have excellent or poor credit. If you have questions about your credit history, call us and talk to an advisor to explore your options.

What are the Cons of Invoice Factoring?

Factoring can come at a higher price tag than other financing options. Some business owners may prefer to pursue other funding alternatives to save on costs.