As strange as it may sound, it's common for a small business to be cash-poor, even if the company is doing well. This is particularly true for startups, whose owners often find themselves staring at a stack of unpaid invoices from clients. Although money is coming, waiting for that influx of cash can put a halt to business, especially when other expenses are due sooner rather than later.
\r\nOne way to climb out of this hole is to factor your invoices. Factoring is helpful because it puts money in your pocket so you can maintain steady cash flow and avoid problems from the people you owe money to. However, factoring isn't for everyone; some businesses are better off with a traditional loan. If you're seeking alternative financing options, check out our recommendations for business loan and financing options.
\r\nHowever, if you are considering factoring, we've examined a number of options and selected the services we think are best for various types of businesses. You can learn more about factoring services and our best picks below.
\r\nFebruary 2020: A recent Payments Journal study reported that 46% of small businesses say they consistently receive late payments from clients and customers, with more than half of small business owners saying that late payments are negatively affecting cash flow. This data highlights the unique position factoring services are in, providing fast cash to small business owners to close funding gaps caused by late payments.
\n"}},{"__typename":"SectionBestPicks","id":"best-picks","isInToc":false,"type":"bestpicks","megaBestPicksTopCardLimit":5,"bestpicks":[{"bullets":["Compatible with QuickBooks ","Advances are available in as little as 24 hours","No long-term contracts"],"description":"Getting money fast is often essential, and BlueVine can help. If you meet the minimum qualifications, your business can receive an advance on your outstanding invoices in as little as 24 hours. This makes BlueVine the best factoring service when you need money quickly.\r\n\r\nMinimum qualifications vary based on your cash flow, financial history and credit. You must have a credit score of at least 530, been in business for at least three months; further, your business must generate $10,000 monthly and earn $100,000 annually. Also, your business must serve other businesses or the government. Your customers must be U.S- based, for the most part. Invoices must equal at least $500 with a due date of at least one week in advance and a payment term of fewer than 13 weeks. Assuming all of the above is true, you should have the money you need in a jiff.","descriptionTest":"","fullTitle":"Fastest Factoring Service","isFeaturedBestPick":false,"isJumpLink":true,"tabTitle":"Fastest","review":{"displayName":"BlueVine","canonical":"https://staging.business.com/reviews/bluevine/","id":"ea79a8540ea2742f3c630e3829a233b1","url":"https://www.bluevine.com/","review":{"pros":["BlueVine has a minimum credit score requirement of 530, which can be beneficial for businesses with poor credit or no credit history.","You choose which invoices you want to factor."],"cons":["To qualify, your business must generate $10,000 per month."],"fullReviewTest":"BlueVine is one of the best factoring companies to consider if you need cash in hand fast. However, it has steeper minimum qualifications compared to other factoring services we reviewed, which may limit some small or new businesses from working with them. If you meet the minimum requirements, you can expect to get an advance on your invoices within 24 hours.
\r\nBlueVine's rates start as low as 0.25% of the advance per week, which is one of the lowest rates we have seen. However, this rate compounds every week the invoice is outstanding, which adds up quickly if your customers regularly pay late.
\r\nOne advantage of BlueVine is that you can choose which invoices you want to factor. Other companies may require you to factor every invoice through them. Additionally, BlueVine does not require you to sign a long-term contract.
\r\nBlueVine provides 85 to 90% of the total invoice value upfront, which isn't as much as what other factoring companies we reviewed will advance you. (Some factoring services will advance you 95% or even 100% of the invoice upfront.) However, you get the remainder, minus BlueVine's fee, when the invoice is paid.
\r\nFor a $15 fee, BlueVine will transfer cash to you the same day you submit an invoice via a wire transfer. Alternatively, you can receive funds in one to two days for free via an ACH transfer.
\r\nWith this factoring service, you can open a credit line that ranges from $20,000 to $5 million. Smaller businesses may not qualify for a line of credit, but for many medium- to large-size businesses who do qualify, it can be a lifesaver if you have an unexpected expense. BlueVine does not charge prepayment penalties.
\r\nBlueVine considers several factors when evaluating your business. In addition to the prequalification criteria below, BlueVine also takes into account your company's cash flow, financial history and the creditworthiness of your customers.
\r\nAt a minimum, you must meet the following criteria to factor with BlueVine:
\r\nYour customers must also meet certain requirements in order for you to factor their invoices. The minimum requirements are:
\r\nFinally, your invoices also must meet specific minimum requirements, which include:
\r\nApplying for a factoring line of credit with BlueVine is fast and easy. The online form takes a few minutes to complete, and asks for basic business details, such as contact information, your tax ID, annual revenue, etc.
\r\nOnce your personal details are filled out, you can submit your financial documents, such as your most recent bank statements or A/R aging report. Alternatively, you can grant BlueVine access to your bank account and accounting software. With read-only access to your accounts, it will determine your creditworthiness. BlueVine is compatible with QuickBooks, Xero and FreshBooks.
\r\nIf you connect your accounting software to BlueVine, invoices automatically appear on your BlueVine dashboard, which saves you from manually entering the information, and you can choose which invoices you want to factor. If your business uses QuickBooks, the application process is even faster as most fields are automatically populated for you.
\r\nOnce you submit your application, BlueVine will respond within 24 hours. Upon approval, BlueVine will help you verify and notify your customers. Initially, BlueVine takes three to five days to provide you cash on a customer's invoice, but subsequent invoices are funded generally in the same day.
\r\nWe contacted BlueVine as a potential customer to test and determine the effectiveness of their customer support. Overall, we found their customer representatives to be helpful and knowledgeable.
\r\nCustomer support isn't available 24/7, but BlueVine has extended business hours Monday through Friday from 8 a.m. to 8 p.m. (ET). They are also available on Saturdays from 12 p.m. to 4 p.m.
\r\nBlueVine is the best factoring service to quickly factor your invoices, but there are some drawbacks you should be aware of.
\r\nFirst, it advances 85 to 90% of an invoice. This is less than what other factoring companies, such as Fundbox, offer that give you a 100% advance.
\r\nSecond, BlueVine only offers recourse factoring, which means you are liable if your clients don't pay their invoices. If you work with reputable customers, this shouldn't be an issue, but one missed payment can set you back and disrupt cash flow for your company.
\r\nFinally, if you own a new business that generates less than $10,000 a month, or if you have poor credit, you are not eligible to work with BlueVine.
\r\n","fullReview":"
BlueVine is one of the best factoring companies to consider if you need cash in hand fast. However, it has steeper minimum qualifications compared to other factoring services we reviewed, which may limit some small or new businesses from working with them. If you meet the minimum requirements, you can expect to get an advance on your invoices within 24 hours.
View all of our factoring service reviews on our best picks page.
\r\nBlueVine's rates start as low as 0.25% of the advance per week, which is one of the lowest rates we have seen. However, this rate compounds every week the invoice is outstanding, which adds up quickly if your customers regularly pay late.
\r\nOne advantage of BlueVine is that you can choose which invoices you want to factor. Other companies may require you to factor every invoice through them. Additionally, BlueVine does not require you to sign a long-term contract.
\r\nBlueVine provides 85 to 90% of the total invoice value upfront, which isn't as much as what other factoring companies we reviewed will advance you. (Some factoring services will advance you 95% or even 100% of the invoice upfront.) However, you get the remainder, minus BlueVine's fee, when the invoice is paid.
\r\nFor a $15 fee, BlueVine will transfer cash to you the same day you submit an invoice via a wire transfer. Alternatively, you can receive funds in one to two days for free via an ACH transfer.
\r\nWith this factoring service, you can open a credit line that ranges from $20,000 to $5 million. Smaller businesses may not qualify for a line of credit, but for many medium- to large-size businesses who do qualify, it can be a lifesaver if you have an unexpected expense. BlueVine does not charge prepayment penalties.
\r\nBlueVine considers several factors when evaluating your business. In addition to the prequalification criteria below, BlueVine also takes into account your company's cash flow, financial history and the creditworthiness of your customers.
\r\nAt a minimum, you must meet the following criteria to factor with BlueVine:
\r\nYour customers must also meet certain requirements in order for you to factor their invoices. The minimum requirements are:
\r\nFinally, your invoices also must meet specific minimum requirements, which include:
\r\nApplying for a factoring line of credit with BlueVine is fast and easy. The online form takes a few minutes to complete, and asks for basic business details, such as contact information, your tax ID, annual revenue, etc.
\r\nOnce your personal details are filled out, you can submit your financial documents, such as your most recent bank statements or A/R aging report. Alternatively, you can grant BlueVine access to your bank account and accounting software. With read-only access to your accounts, it will determine your creditworthiness. BlueVine is compatible with QuickBooks, Xero and FreshBooks.
\r\nIf you connect your accounting software to BlueVine, invoices automatically appear on your BlueVine dashboard, which saves you from manually entering the information, and you can choose which invoices you want to factor. If your business uses QuickBooks, the application process is even faster as most fields are automatically populated for you.
\r\nOnce you submit your application, BlueVine will respond within 24 hours. Upon approval, BlueVine will help you verify and notify your customers. Initially, BlueVine takes three to five days to provide you cash on a customer's invoice, but subsequent invoices are funded generally in the same day.
\r\nWe contacted BlueVine as a potential customer to test and determine the effectiveness of their customer support. Overall, we found their customer representatives to be helpful and knowledgeable.
\r\nCustomer support isn't available 24/7, but BlueVine has extended business hours Monday through Friday from 8 a.m. to 8 p.m. (ET). They are also available on Saturdays from 12 p.m. to 4 p.m.
\r\nBlueVine is the best factoring service to quickly factor your invoices, but there are some drawbacks you should be aware of.
\r\nFirst, it advances 85 to 90% of an invoice. This is less than what other factoring companies, such as Fundbox, offer that give you a 100% advance.
\r\nSecond, BlueVine only offers recourse factoring, which means you are liable if your clients don't pay their invoices. If you work with reputable customers, this shouldn't be an issue, but one missed payment can set you back and disrupt cash flow for your company.
\r\nFinally, if you own a new business that generates less than $10,000 a month, or if you have poor credit, you are not eligible to work with BlueVine.
\r\nEditor's note: Looking for the right factoring service for your business? Fill out the below questionnaire to have our vendor partners contact you about your needs.
"},"pricing":{"isCapped":false,"isFeatured":false,"primary":true,"selected":"widget","widgetId":"10062","widget":{"id":"10062","cta":"Compare Quotes","isExclusive":false},"affiliate":{"cta":"Visit Site","link":"https://www.bluevine.com/","name":""}},"thumbnail":{"path":"https://staging.business.com/images/rz/5e1779ab7b4374a3258b456c/bluevine_logo.png"}}},{"bullets":["Offers asset-based lending","Rates are based on customer credit ","Accounts receivable financing available"],"description":"For 83 years, altLine The Southern Bank Company, a well-established lender, has provided small businesses with funding. Its alternative lending arm offers various options, including invoice factoring. Unlike most of the factoring services we reviewed, altLINE is backed by an established, reputable bank. That gives this company unprecedented authority in the industry. Because of its minimum qualifications, funding capabilities and strong reputation, altLINE is the best overall factoring service. \r\n\r\nFor clients, the company offers an advance ranging from $30,000 to $5 million, and it will advance between 80 and 90% of the face value within 24 hours. Its charges start below average at 0.75% but go up to 3.5%. It will vary based on business, industry and needs. altLine doesn't consider how profitable your company is or how long you've been in business.","descriptionTest":"","fullTitle":"Best Factoring Service Overall","isFeaturedBestPick":false,"isJumpLink":false,"tabTitle":"Best Overall","review":{"displayName":"altLine The Southern Bank Company","canonical":"https://staging.business.com/reviews/altline-southern-bank-company/","id":"b9ad37235ce65d83a8bf0b8bb5911877","url":"https://altline.sobanco.com/","review":{"pros":["altLINE assigns you a loan specialist who advises you on whether factoring is a good option for your business.","altLINE offers invoice factoring, A/R financing and asset-based lending."],"cons":["It can take up to seven days to set up your account and receive funding."],"fullReviewTest":"","fullReview":"altLINE is the alternative lending arm of The Southern Bank Company, an established lender that has been in business since 1936. Because it is backed by a reputable bank, it has unprecedented authority in the industry and offers some of the most competitive rates of all the services we evaluated. With its minimum qualifications, funding options and an unparalleled reputation, altLINE is our pick as the best overall factoring service.
View all our factoring service reviews on our best picks page.
\r\nWhen you factor your invoices with altLINE, you can get an advance ranging from $30,000 to $5 million. The factoring service will advance you between 80 and 90% of the face value of the invoice within 24 hours. An 80% advance is on the lower end for factoring, but a 90% advance should help you with your cash flow bottleneck.
\r\nOn average, most factoring companies charge between 1 and 5% of each invoice you factor with them. The rate for altLine starts lower at 0.75% and goes up to 3.5%. This low starting rate is better than most competitors, but your actual rate will depend on your business, industry and specific needs.
\r\naltLINE offers three different accounts-receivable-based products: asset-based lending, accounts receivable financing and invoice factoring. altLINE will work with your business to find the best financial option for your business, which is a huge plus.
\r\nLike most other factoring companies, altLINE considers the creditworthiness of your customers to assess risk. altLINE does not use your credit score as a primary consideration to determine whether they will work with you or not. However, your specific rate will be determined, in part, by your customers' credit and ability to pay their invoices.
\r\nAdditionally, this factoring service does not consider the profitability of your business, which is beneficial for new or small businesses. altLINE also overlooks how long you have been in business, which is beneficial for startups.
\r\nLike most factoring companies, altLINE does not charge an application fee. You can request a free quote from altLINE's website to determine what your rate will look like. The process is straightforward, simple and can be completed in just a few minutes.
\r\nOnce you complete the quote, an altLINE loan specialist works with you to determine if factoring is the right service for your business's needs. If you proceed with invoice factoring, you will then fill out an official application. You don't have to prepare a substantial amount of documentation for altLINE, as your customer's credit score is their primary focus.
\r\nOnce you have submitted your application, it can take up to seven days to be approved, which is longer than many of the other factoring services we reviewed. However, subsequent invoices are advanced to you within 24 hours.
\r\naltLINE has one of the best reputations in the factoring industry because it is backed by a trusted bank. As of January 2020, it has an A+ accreditation with the Better Business Bureau. altLINE is one of the few factoring companies we reviewed that provides detailed, transparent information on its website.
\r\nSimilarly, when we called altLINE, posing as a small business owner, the customer service representatives we spoke with provided clear, concise information regarding its products. They were also helpful and friendly, and they didn't push us to apply for their services. Rather, they provided different options for us to consider and answered all of our questions, which is somewhat of a rarity in the factoring industry.
\r\naltLINE is an excellent alternative lender with excellent factoring services. Our sole complaint is that initial funding can take up to seven days as the company finalizes your agreement and sets up your account. However, after your first invoice has been factored, subsequent invoices take less than 24 hours to advance funds, which is the industry standard.
\r\nEditor's note: Looking for the right factoring service for your business? Fill out the below questionnaire to have our vendor partners contact you about your needs.
"},"pricing":{"isCapped":false,"isFeatured":false,"primary":true,"selected":"widget","widgetId":"10062","widget":{"id":"10062","cta":"Compare Quotes","isExclusive":false},"affiliate":{"cta":"Visit Site","link":"https://altline.sobanco.com/","name":""}},"thumbnail":{"path":"https://staging.business.com/images/rz/5d0a4b445a215e3c048b4568/altline.png"}}},{"bullets":["Works with all types of credit","No setup charge","Offers nonrecourse factoring "],"description":"American Receivable has been in business since 1979. It offers great features, and its eligibility requirements aren't overly restrictive. For example, there is no commitment minimum. The fast approval time and funding, lack of commitment minimums and stellar customer service make this the best factoring service for small businesses. \r\n\r\nAmerican Receivable works with startups and all types of credit. There is no setup fee, application fee or termination fee, making it great for small businesses with limited capital. One of our favorite features of American Receivable is the acceptance of invoices that are up to 120 days overdue. The industry average is between 60 and 90 days. Plus, it's a non-recourse factoring company, which means if one of your customers neglects to pay, you aren't required to buy back the invoice.","descriptionTest":"","fullTitle":"Best Factoring Service for Small Businesses","isFeaturedBestPick":false,"isJumpLink":false,"tabTitle":"Best for SMBs","review":{"displayName":"American Receivable","canonical":"https://staging.business.com/reviews/american-receivable/","id":"b007ffd1b81688dec140210a6115f5f8","url":"https://americanreceivable.com/","review":{"pros":["American Receivable provides factoring for startups.","There are no setup, application or termination fees."],"cons":["Businesses can only factor up to $3 million, which is considered a low monthly ceiling."],"fullReviewTest":"","fullReview":"American Receivable is an excellent factoring service with fast turnarounds, no monthly minimums and a long, reputable business history. It was founded in 1979 and has many stellar features and solid eligibility requirements. American Receivable has no commitment minimums and excellent customer support, making it the best factoring service for small businesses.
View all of our factoring service reviews on our best picks page.
\r\nAmerican Receivable's low fees and high initial percent funded are a strong plus in its favor. At a minimum, it charges 0.8% of an invoice as its fee, though this rate varies depending on your circumstances and the terms of the contract you draw up with American Receivable. At the most, it funds up to 95% of your invoice upfront, which can greatly improve cash flow for your business.
\r\nThis service works with startups and companies with all types of credit. Like most factoring companies, American Receivable considers the credit of your customers more than your own credit, since your customers are the ones who will owe it money.
\r\nAmerican Receivable does not charge a setup or application fee. This saves you money and doesn't disrupt your cash flow, making American Receivable an excellent choice for small businesses with limited capital. The company also doesn't charge a termination fee if you stop factoring with American Receivable.
\r\nFinally, American Receivable is a nonrecourse factoring company; if one of your customers does not pay American Receivable, you are not required to buy back the invoice you've sold to it. This reduces the risks associated with factoring and minimizes any negative impact with your business's cash flow.
\r\nUnlike most factoring companies, American Receivable does not have strict prequalification requirements. The company doesn't consider how long your company has been in business, its revenue and credit score. Rather, the factoring service concerns itself with the creditworthiness of your customers, as they are the ones that pay the invoice. This can be a double-edged sword, as your ability to factor depends entirely on your customers, which may limit the invoices you can factor.
\r\nOne of the best things about American Receivable is that there is no invoice minimum. You do not have to submit a minimum dollar amount of invoices each month. American Receivable also doesn't have a minimum commitment – you don't have to contract with them for a specified amount of time. All of its services are based on what you need, when you need it.
\r\nTo get started with American Receivable, you can visit their website and submit an application online, or you can download a form and fax it to the company.
\r\nIt will typically get back to you within 24 hours. After you're approved and your account is set up, you usually receive funding within 24 hours of submitting an invoice.
\r\nWe reached out to American Receivable to test its customer service. The agents we spoke with were knowledgeable and professional. We didn't have any trouble getting in touch with them, and representatives answered our questions thoroughly.
\r\nAmerican Receivable offers a dedicated advisor to its clients. The advisor works with you every step of the way to answer any questions you might have. The company also offers phone support, live chat and email support. Additionally, you can connect with American Receivable via Facebook, LinkedIn and Blogger.
\r\nOne exceptional feature with American Receivable is that the company accepts invoices that are up to 120 days overdue. By contrast, the average in the factoring industry is between 60 and 90 days, so American Receivable's ceiling is especially helpful to businesses that need to sell invoices that have a higher delinquency. As delinquent accounts are what generally disrupt business cash flow, this element is important to think about when considering if American Receivable is the best factoring company for your business.
\r\nYou can only factor up to $3 million a month with American Receivable, which is on the low end of the spectrum as far as a monthly ceiling. This amount may not be too low for what your business needs to factor each month, but if you anticipate growing, you may want to consider another factoring company. Still, it's important to consider how much you'll need to factor when deciding which invoice factoring company you should work with.
\r\nAmerican Receivable offers highly competitive rates, plus there are no setup or termination fees. Its eligibility requirements make it accessible to companies seeking to improve their cash flow by selling overdue accounts that are up to 120 days delinquent. It has a fast turnaround time, no commitment minimums, and it offers nonrecourse factoring. All of these features make American Receivable the best factoring service for small businesses.
\r\nEditor's note: Looking for the right factoring service for your business? Fill out the below questionnaire to have our vendor partners contact you about your needs.
"},"pricing":{"isCapped":false,"isFeatured":false,"primary":true,"selected":"widget","widgetId":"10062","widget":{"id":"10062","cta":"Compare Quotes","isExclusive":false},"affiliate":{"cta":"Visit Site","link":"https://americanreceivable.com/","name":""}},"thumbnail":{"path":"https://staging.business.com/images/rz/5e1760d07b43746d058b456d/american_receivable_logo.png"}}},{"bullets":["The maximum advance is $100,000","Compatible with FreshBooks accounting software","No personal guarantee required"],"description":"There are very few minimum requirements for Fundbox. It advances 100% of an invoice, and its pricing structure is transparent. It does not consider your personal credit history or how long you've been in business. All of these elements make this factoring company the best for new business owners. Fundbox does not dock you with monthly minimums or prepayment penalties, and there's no lengthy contract. To meet Fundbox's minimum requirements, your business must be based in the U.S., have a business checking account, generate at least $50,000 per year, and use supported accounting software (eBility, FreshBooks, Harvest, InvoiceASAP, Jobber, Kashoo, QuickBooks Desktop or Online, Xero, or Zoho) with at least two months of activity and five invoices per month. The application process is straightforward – you simply need to provide your business email address and a phone number and set a password. \r\n\r\nMay 2020: Fundbox and Brandwise, a sales technology company that helps suppliers and sale agencies sell to retailers, have formed a new partnership. Fundbox will now serve as Brandwise's business-to-business trade financial partner, which will allow Brandwise to finance its 250,000 retailers. Additionally, this will permit those businesses to run transactions with their customers and give them access to working capital. Through the partnership, suppliers will get paid close to a day after an order is processed. \r\n\r\nApril 2020: Fundbox has joined the initiative #paytoday, which comprises organizations that serve small businesses. (Business.com is a member of #paytoday.) #Paytoday was created to encourage enterprises and federal agencies to speed their payments to small business owners dealing with cash flow issues because of the coronavirus pandemic. \r\n\r\nMarch 2020: In the wake of the coronavirus outbreak, Fundbox has stated that it hopes its process of quickly examining small business borrowers could help in how long it takes for the U.S. to rebound economically. Fundbox believes its data analysis technology, which helps it make three-minute lending decisions, can be a big benefit to companies that need money immediately and are dealing with financial crisis due to the business slowdown.\r\n","descriptionTest":"","fullTitle":"Best Factoring Service for Startups","isFeaturedBestPick":false,"isJumpLink":true,"tabTitle":"Startups","review":{"displayName":"Fundbox","canonical":"https://staging.business.com/reviews/fundbox/","id":"82aa46dabdcc64c58feef090f953e67c","url":"https://fundbox.com/","review":{"pros":["Fundbox doesn't charge early payment penalties.","The application process is straightforward. Applicants provide their business email address, a phone number and set a password."],"cons":["Fundbox charges 11 fees, including those for origination, monthly minimum volume, renewals, credit checks, ACH transactions and wires."],"fullReviewTest":"Fundbox is the best invoice financing service for startups because it has few minimum requirements and advances 100% of the value of an invoice. This company has simple minimum requirements to use its services and does not consider your personal credit history or the age of your business, which makes it ideal for new business owners.
\r\nOne of Fundbox's best qualities is its transparent pricing. Before it factors a specific invoice, the company shows you the exact fee you will pay for that invoice, so you won't be caught off guard when you repay the advance.
\r\nFundbox does not dock you with monthly minimum or prepayment penalties, which allows you to repay your advances early. Additionally, if you are able to repay advances ahead of schedule, Fundbox waives your remaining fees. Like most of the best factoring services, Fundbox does not make you sign a lengthy contract.
\r\nOn a 12-week term, Fundbox fees start at 4.66% of your invoices per week. For a 24-week term, that percentage jumps to 8.99% per week. Unlike most factoring services, Fundbox advances 100% of the value of the invoice. However, you repay the company a prorated portion of the invoice each week, plus a fee.
\r\nFundbox has low minimum requirements that makes it a viable financing option for startups that lack a long credit history or have poor credit. There are four minimum requirements:
\r\nOne of Fundbox's greatest strengths is that it works with all industries, including healthcare, freight and construction. Another positive is that the factoring service doesn't require collateral or personal guarantees.
\r\nFundbox doesn't consider the personal credit scores of you or your customers. However, it may conduct background checks on you and the rest of your business's leadership team when you create an account.
\r\nEven with its minimal requirements, Fundbox advances 100% of invoice values, which makes it the best factoring option for startups that are too small to work with most other factoring companies.
\r\nFundbox's application process is easy and straightforward. You can quickly create an account without speaking to a customer support representative. All you need is your business email, phone number and a password. When you sign up, you don't need to provide tax forms, financial statements or other legal documents.
\r\nWhen you are ready, you connect your newly created account with your business's accounting software. Fundbox currently supports the following accounting software options:
\r\nIf you don't use one of these accounting programs, Fundbox can offer you lines of credit.
\r\nAfter you connect Fundbox to your accounting software or business bank account, it analyzes the data to evaluate the legitimacy of your business. You need at least three months of data to factor invoices through Fundbox.
\r\nTo evaluate Fundbox's customer service, we called the company posing as a small business owner. We had mixed results, as our calls on Friday afternoons routinely went to voicemail. Our calls on Monday mornings were more successful, as we reached a representative right away.
\r\nAlthough Fundbox doesn't offer 24/7 customer support, phone support is available from 8 a.m. to 8 p.m. EST Monday through Friday. Fundbox will respond to your emails within 24 hours, which is faster than some other companies we evaluated.
\r\nFundbox has a helpful blog, FAQs page and support center that covers numerous topics addressing a variety of issues, including pricing terms, payments and security. There are tutorials to show you how to get started, use the dashboard and set up your accounting software with Fundbox.
\r\nFundbox is one of the most transparent factoring services with its pricing. Regardless of what kind of business financing you need, transparency is a key feature to look for. When you select an invoice to factor, Fundbox presents you with the total amount you'll pay before you even accept the advance. This can help you strategically select which invoices to factor.
\r\nFurthermore, it charges no application, origination, due diligence or maintenance fees. According to our conversations with customer support representatives, you pay $7 a week for a $1,000 advance on average, though your rates may be higher or lower depending on your agreement. This weekly price is somewhat higher than the $3.88 the website's calculator estimates for the same amount. However, there's no penalty if you repay the advance early, and Fundbox then waives the remaining fees for the weeks left on your term.
\r\nAlthough Fundbox is the best factoring service for startups, there are a few drawbacks to consider before working with this company:
\r\n","fullReview":"
Fundbox is the best invoice financing service for startups because it has few minimum requirements and advances 100% of the value of an invoice. This company has simple minimum requirements to use its services and does not consider your personal credit history or the age of your business, which makes it ideal for new business owners.
\r\nSee all our recommendations for factoring services on our best picks page.
\r\nOne of Fundbox's best qualities is its transparent pricing. Before it factors a specific invoice, the company shows you the exact fee you will pay for that invoice, so you won't be caught off guard when you repay the advance.
\r\nFundbox does not dock you with monthly minimum or prepayment penalties, which allows you to repay your advances early. Additionally, if you are able to repay advances ahead of schedule, Fundbox waives your remaining fees. Like most of the best factoring services, Fundbox does not make you sign a lengthy contract.
\r\nOn a 12-week term, Fundbox fees start at 4.66% of your invoices per week. For a 24-week term, that percentage jumps to 8.99% per week. Unlike most factoring services, Fundbox advances 100% of the value of the invoice. However, you repay the company a prorated portion of the invoice each week, plus a fee.
\r\nFundbox has low minimum requirements that makes it a viable financing option for startups that lack a long credit history or have poor credit. There are four minimum requirements:
\r\nOne of Fundbox's greatest strengths is that it works with all industries, including healthcare, freight and construction. Another positive is that the factoring service doesn't require collateral or personal guarantees.
\r\nFundbox doesn't consider the personal credit scores of you or your customers. However, it may conduct background checks on you and the rest of your business's leadership team when you create an account.
\r\nEven with its minimal requirements, Fundbox advances 100% of invoice values, which makes it the best factoring option for startups that are too small to work with most other factoring companies.
\r\nFundbox's application process is easy and straightforward. You can quickly create an account without speaking to a customer support representative. All you need is your business email, phone number and a password. When you sign up, you don't need to provide tax forms, financial statements or other legal documents.
\r\nWhen you are ready, you connect your newly created account with your business's accounting software. Fundbox currently supports the following accounting software options:
\r\nIf you don't use one of these accounting programs, Fundbox can offer you lines of credit.
\r\nAfter you connect Fundbox to your accounting software or business bank account, it analyzes the data to evaluate the legitimacy of your business. You need at least three months of data to factor invoices through Fundbox.
\r\nTo evaluate Fundbox's customer service, we called the company posing as a small business owner. We had mixed results, as our calls on Friday afternoons routinely went to voicemail. Our calls on Monday mornings were more successful, as we reached a representative right away.
\r\nAlthough Fundbox doesn't offer 24/7 customer support, phone support is available from 8 a.m. to 8 p.m. EST Monday through Friday. Fundbox will respond to your emails within 24 hours, which is faster than some other companies we evaluated.
\r\nFundbox has a helpful blog, FAQs page and support center that covers numerous topics addressing a variety of issues, including pricing terms, payments and security. There are tutorials to show you how to get started, use the dashboard and set up your accounting software with Fundbox.
\r\nFundbox is one of the most transparent factoring services with its pricing. Regardless of what kind of business financing you need, transparency is a key feature to look for. When you select an invoice to factor, Fundbox presents you with the total amount you'll pay before you even accept the advance. This can help you strategically select which invoices to factor.
\r\nFurthermore, it charges no application, origination, due diligence or maintenance fees. According to our conversations with customer support representatives, you pay $7 a week for a $1,000 advance on average, though your rates may be higher or lower depending on your agreement. This weekly price is somewhat higher than the $3.88 the website's calculator estimates for the same amount. However, there's no penalty if you repay the advance early, and Fundbox then waives the remaining fees for the weeks left on your term.
\r\nAlthough Fundbox is the best factoring service for startups, there are a few drawbacks to consider before working with this company:
\r\nEditor's note: Looking for the right factoring service for your business? Fill out the below questionnaire to have our vendor partners contact you about your needs.
"},"pricing":{"isCapped":false,"isFeatured":false,"primary":true,"selected":"widget","widgetId":"10062","widget":{"id":"10062","cta":"Compare Quotes","isExclusive":false},"affiliate":{"cta":"Visit Site","link":"https://fundbox.com/","name":""}},"thumbnail":{"path":"https://staging.business.com/images/rz/5d128e6b9c658ac2018b4570/Fundbox.png"}}},{"bullets":["Specializes in factoring for the freight and trucking industry","Offers a fuel card program for companies","Equipment leasing is available"],"description":"Specializing in, but not exclusive to, the freight and trucking industries, RTS Financial has a slew of extra perks among invoice factoring companies. It offers a fuel card program that saves you 18 cents per gallon and a credit line up to $2,500 per truck per week, plus equipment leasing and trucking-related software that can help you manage every aspect of your business. It also offers an exclusive web browser and mobile app that helps truck drivers find discounted diesel prices, plan trips and more. Those extra features, on top of offering 97% of the total invoice and a lack of hidden fees, make it the best for freight and trucking companies. \r\n\r\nTo get started, you must file an application with a sales representative. It is a non-recourse factoring company, meaning your company cannot be held liable if a customer fails to pay. The company has been around since 1986.","descriptionTest":"","fullTitle":"Best Factoring Service for Freight and Trucking Companies","isFeaturedBestPick":false,"isJumpLink":false,"tabTitle":"Freight & Trucking Companies","review":{"displayName":"RTS Financial","canonical":"https://staging.business.com/reviews/rts-financial/","id":"2a94f9d4df192ea38338ce486a4a9eaa","url":"https://www.rtsfinancial.com/","review":{"pros":["RTS Financial offers web browsers and mobile apps that help truck drivers plan trips and find discounted diesel prices.","It does not charge minimum volume fees, ACH fees or invoice-upload fees."],"cons":["You cannot apply online. Instead, you must contact the company to discuss your business and your options."],"fullReviewTest":"","fullReview":"RTS Financial is a non-recourse invoice factoring company that specializes in the freight and trucking industry. Though it works with many different industries, its primary focus on the trucking industry is evident in its fuel card program, equipment leasing and various trucking-related software. For these reasons, RTS Financial is the best factoring service for freight and trucking companies.
See all our recommendations for factoring services on our best picks page.
\r\nOnce you factor an invoice with RTS Financial, it will advance you up to 97% of the total amount. This is a higher amount than the vast majority of factoring companies we reviewed will advance to you, giving you more cash in hand to solve your cash flow problems.
\r\nAnother major benefit of working with RTS Financial is that it does not charge hidden fees, such as volume fees, ACH fees or invoice-upload fees. Unfortunately, though, it does not publish its fee for factoring your invoices on its website, and the customer support representatives we spoke to were unwilling to divulge this information without an application. The average rate for the industry is 1% to 5% of the total invoice value, which is what you should expect. The best factoring services offer rates below 1.5%.
\r\nBecause RTS Financial specializes in the freight and trucking industry, it offers some services beyond factoring for this type of company. For example, it has a fuel card program that saves an average of 18 cents per gallon and provides a line of credit up to $2,500 per truck per week. This program also provides fuel discounts at hundreds of stations across the country.
\r\nAnother noteworthy trucking-specific service that RTS Financial offers is its software. This trucking software is designed to help you with all the management of your trucking company, including your factoring agreement with RTS Financial.
\r\nRTS Financial offers non-recourse factoring, which means you are not held liable if one of your customers or clients fails to pay their invoice. The alternative – recourse factoring – requires you to buy back unpaid invoices, which can severely limit your cash flow and set you back.
\r\nWhile this factoring service states that it doesn't have a monthly minimum requirement for freight and trucking companies, a representative told us it has a monthly minimum volume of $150,000 for a factoring agreement with a non-trucking company. This means small businesses and startups outside of the trucking industry won't be able to work with RTS Financial.
\r\nAt the time of this writing, you can't apply for factoring on RTS Financial's website. Rather, you must contact a sales representative over the phone to discuss your business and your options. Most factoring services allow you to apply online before speaking with a representative of the company, which tends to be quicker and more convenient.
\r\nWe contacted RTS Financial posing as a potential customer to test its customer service. The representatives we spoke to were helpful and provided some of the information we were looking for, though they didn't answer every question. We contacted the company several times over the course of six weeks, and no representative was willing to provide specific information regarding the company's fee structure.
\r\nIn addition to email and telephone support, RTS Financial offers a chatbot on its website that can connect you to a customer support representative. The company is responsive and will get in contact with you quickly.
\r\nUnfortunately, RTS Financial does not readily publish its pricing and rates on its website. This lack of transparency means you have to contact a customer support representative to get specific information. Furthermore, we found a few negative reviews that indicated some customers struggled to get out of their contracts.
\r\nAlso, you can't apply to factor your invoices through RTS Financial online. You must contact a sales representative and discuss your factoring options over the phone, whereas many other factoring companies offer a quick online application process with fast turnaround.
\r\nEditor's note: Looking for the right factoring service for your business? Fill out the below questionnaire to have our vendor partners contact you about your needs.
"},"pricing":{"isCapped":false,"isFeatured":false,"primary":true,"selected":"widget","widgetId":"10062","widget":{"id":"10062","cta":"Compare Quotes","isExclusive":false},"affiliate":{"cta":"Visit Site","link":"https://www.rtsfinancial.com/","name":""}},"thumbnail":{"path":"https://staging.business.com/images/rz/5d02c3a75a215e2b158b4573/RTS-Financial1.png"}}}]},{"__typename":"SectionWidget","id":"get-a-quote","isInToc":false,"type":"widget","title":"Find the Right Factoring Service for Your Business","widget":{"widgetId":"10062"}},{"__typename":"SectionOurApproach","id":null,"isInToc":false,"type":"ourapproach","isActive":null,"ourapproach":{"isClonable":false,"servicesConsidered":"29","servicesTested":"9","servicesSelected":"5","linkText":"How we evaluate products and services","linkUrl":"mailto:editor@business.com"}},{"__typename":"SectionContainer","id":"compare-our-best-picks","isInToc":true,"type":"container","title":"Compare Our Best Picks","container":{"isBuyingGuide":false,"html":"| \r\n | altLine The Southern Bank Company | \r\nAmerican Receivable | \r\nBlueVine | \r\nFundbox | \r\nRTS Financial | \r\n
| Advance rate | \r\n80-90% | \r\n95% | \r\n85-90% | \r\n100% | \r\n97% | \r\n
| Minimum credit score requirement | \r\nDoes not use your credit score as a primary consideration | \r\nConsiders all credit | \r\nPersonal credit score of 600 or more | \r\n500 | \r\nAll credit scores considered | \r\n
| Funding amounts offered | \r\n$30K-$5M | \r\n$10K-$5M | \r\nUp to $5M | \r\nUp to $100K | \r\n$2,500 per truck, per week | \r\n
| Funding time | \r\n3-7 days | \r\n24 hours | \r\nWithin hours | \r\nNext day | \r\nSame day | \r\n
Just like business lending services, factoring fees and rates are based on several different calculations and factors. Generally speaking, factoring companies consider the following when determining your rate:
\r\nMost factoring services charge between 1 and 5%. However, many services discount the rate the earlier your customers pay their invoices. For example, a factoring company may charge a 2% rate for invoices paid within 30 days, plus 1% every additional week until the invoice is paid. This fee structure is beneficial for businesses that work with fast-paying clients, but your fees quickly add up with just one slow-paying customer.
\r\nYour best option is to look for a service that offers a large percentage upfront and charges low fees. Universal Funding Corporation funds up to 95% of your invoices upfront and charges 0.55%.
\r\nThe best factoring services also provide excellent customer service. Look for a factoring company that offers a dedicated account manager who can answer your questions or concerns about the service. Consider, too, the ease of reaching the company. All of the companies we reviewed offer the standard email and phone options; others offer local branches so you can meet with representatives in person.
\n"}},{"__typename":"SectionBuyingGuide","id":"what-is-a-factoring-company","isInToc":true,"type":"buying-guide","title":"Buying Guide","containers":[{"title":"What Is a Factoring Company?","html":"\nA factoring company ‒ also known as invoice factoring or accounts receivable factoring ‒ is a service that purchases your open, unpaid invoices and advances your business money to cover a portion of those invoices. In other words, you \"sell\" the unpaid invoices your clients or customers owe you for roughly 80 to 100% of the value of the invoice.
\r\nAfter a factor purchases your receivables, they collect payment from your clients and customers directly. In some cases, a factoring company will operate behind the scenes, requiring you to contact the customer and collect their payment.
\r\nOnce your customer pays their invoice, you receive the remaining amount of the invoice from the factoring company, minus their fees.
\r\nThe primary reason businesses work with a factoring company is to open up their cash flow. Factoring is a good option if your business typically waits 30 to 60 days (or more) to receive payment from clients.
\n"},{"title":"Benefits of Factoring Companies","html":"\nFactoring can be a good option for improving your business's cash flow, and there are many benefits of working with a factoring service, such as:
\r\nWhile there are benefits to using a factoring service, it can be a risky choice for a few reasons. The most obvious drawback is that you lose part of what would be a profit to fees.
\r\nConsider these elements as well before working with a factoring service:
\r\nAnother risk is with recourse factoring – the most common form of factoring – in which you agree to buy back accounts that your factoring service cannot collect. Generally, you receive around 80% of the total amount; whatever amount the factoring company initially fronts you, you must repay. Recourse factoring can put you in a worse financial position than you were in before you factored. If recourse factoring seems too risky, consider Factor Funding, as it offers nonrecourse factoring.
\r\nBefore working with a factoring service, research its reputation. If it has a history or pattern of rude or harassing behavior, look elsewhere.
\r\nFactoring companies are not collection agencies. The main purpose of factoring companies is to improve your cash flow, not to harass your customers to pay a debt. If your customer is late paying, some factoring services notify your customers in writing, or they may call to ask for payment, but they generally do not drive customers away.
\r\nStill, do your due diligence that the company you choose has solid customer service and a helpful follow-up process that won't drive your customers away. [Are you looking for a collection agency? Check out our best picks and reviews of those services.]
\r\nIf factoring seems too risky, merchant cash advances are another option to consider. They are yet another alternative to a traditional loan.
\n"},{"title":"How to Select the Best Factoring Company","html":"\nThe number of factoring companies is vast, so it's important to carefully consider your business needs, what services are available to you and which companies have the best offers.
\r\nFirst, ensure that you are eligible to use the service. Some factoring services work with specific industries, such as trucking, gas or oil. CapitalPlus, for example, specializes in factoring for construction companies.
\r\nMost of the services we evaluated work with startups, and many will not turn you away if you have poor credit or a bankruptcy. Paragon Financial is a nonrecourse factoring company that ignores the personal credit of a business owner and, instead, focuses on the customer's ability to pay. While this is beneficial for businesses with poor credit, your ability to secure money from a factoring service depends on the creditworthiness of your customers. Factoring companies will not purchase invoices if your customers are high risk.
\r\nChoosing the best factoring service for your business also depends on how delinquent your invoices are. Some companies don't accept delinquent accounts or only accept invoices that are up to 45 days delinquent. On average, most companies accept accounts that are overdue between 60 and 90 days. Riviera Finance, on the other hand, has no maximum number of days an invoice can be overdue for the company to buy from you.
\r\nLast, consider the factoring service's approval and funding process. The best services have a quick turnaround time for approval and funding. Many of the services we evaluated will review your application (and notify you of their decision) within 24 hours, and all can transmit funds 24 hours from the time you submit an invoice to be factored. All of the services we've listed are available nationwide, and most work with startups.
\n"},{"title":"What Are the Best Factoring Companies?","html":"\nAfter reviewing factoring services across the industry, our top-rated factoring companies are:
\r\nThe best factoring services do not charge startup or termination fees, and the percentage they charge for their services is low. If you do not want to factor all of your invoices, choose a service with no invoice minimum. (We've indicated in our reviews if the factoring service has an invoice minimum or not.) Some factoring companies require up to 24 months of commitment. (We also specify in each review if there is a commitment requirement.) The best companies don't require you to commit to the factoring service for a period of time, so you are under no obligation to sell your accounts in the future.
\n"},{"title":"What Types of Businesses Use Factoring Companies?","html":"\nGenerally speaking, any B2B (business-to-business) company that invoices their customers for goods and services provided giving 30- to 60-day terms can work with a factoring company. Common industries and businesses factoring companies work with include:
\r\nAlternatively, many factoring companies and financial entities won't work together, so if you already have a business loan, you might not be able to factor invoices. A factor secures its rights to your invoices via a lien to grant them first rights on the asset. However, most banks and financial companies file a lien that covers all of your company's assets, including your accounts receivable. A factoring company won't work with you if another financial entity already has first rights on your accounts receivable.
\r\nIn some cases, your bank may subordinate their position for your receivables so a factoring company can claim first rights, but the chances are slim. Accounts receivable is a valuable asset to use as collateral, and most financial entities won't let go of this asset lightly.
\n"},{"title":"Frequently Asked Questions","html":"\nFreight factoring companies, also known as trucking factoring companies, operate similarly to other factoring companies, and you can expect similar rates and fees. Rates vary by company, but they usually start between 1% and 5%, and many freight factoring companies charge a lower rate for invoices that are paid quickly.
\r\nNo. You can only work with one factoring company at a time because it is otherwise too difficult to determine who has the first right to your company's outstanding invoices. To establish the first right on your receivables, factoring companies file a UCC lien so they can start collecting your invoices.
\r\nYes. If you switch to a different factoring company but still have outstanding receivables, you must arrange a buyout in which the new factor purchases the remaining invoices. Additionally, the UCC liens must be changed so the new factoring company establishes first right. Switching factoring companies can be an expensive process, especially if you signed a long-term contract with the original company.
\r\nMany people use the terms \"invoice financing\" and \"invoice factoring\" interchangeably, but they operate very differently. A factoring company purchases the right to the value of your accounts receivable, whereas with an invoice financing company, you borrow against the value of your accounts receivable but still own your invoices.
\r\nThe main difference between recourse and nonrecourse factoring is who is responsible if your customer doesn't pay their invoice. With recourse factoring, you are responsible for your customers' unpaid invoices, though your rates will be lower for the added risk. If you work with a recourse factoring company, make sure your clients have a good credit history.
\r\nOn the other hand, with nonrecourse factoring, you are not responsible for late or unpaid invoices. Rather, the factoring company accepts the risk, though nonrecourse factoring is more expensive than recourse factoring.
\r\nIn the United States, invoice factoring companies are not regulated by a formal government body. However, many factors are members of associations that self-regulate their practice, such as the International Factoring Association or the Secured Finance Network (formerly known as the Commercial Finance Association).
\r\nWhen using invoice factoring, you're selling your unpaid invoices to a factoring company, which is different from requesting a bank loan from a financial institution. Bank loans require you to pay back principal and interest over a certain time period, and your funding potential is limited. Approval is determined by your company's credit history, unlike invoice factoring, which is based on the credit strength of your clients.
\r\nFactoring has many advantages for small businesses, and a big one is helping manage cash flow. With factoring, you get paid as soon as you turn the invoice over to the factor – which can be as soon as you provide the service or ship the product. You won't have to wait days, weeks or months to add cash to your bank account.
\r\nSince factoring is a sale of your invoices, you aren't taking on new debt that may or may not have a high interest rate associated with it. You also aren't stuck worrying when customers will make their payments since the factor can have the money to you quickly, which improves your ability to manage cash flow.
\r\nWith more certainty about accounts receivable, you can better plan and take advantage of growth opportunities that arise.
\r\nFactoring also eliminates the need to conduct collections internally. That frees you up to run the business and protects your relationship with customers – you won't be the one chasing down payments; the factoring company does it for you.
\r\nFactoring companies offer several services around collecting past due payments for business customers. Here are four of the most common services they provide:
\r\nLike other contracts, you can terminate a factoring contract at the end of the specified term and before the renewal period ends. Every factoring company that we evaluated requires clients to give notice before the renewal date; the time periods vary, however, it can be anywhere from 30 to 90 days. Check the contract to verify how early you need to submit notice.
\r\nIf you want to cancel before the term ends, there are fees involved. Early cancellation fees vary; again, you will need to check the contract.
\r\nIf your business experiences financial difficulties, factoring invoices can give you access to cash flow – you won't have to wait for your customers to pay you. That could mean the difference between keeping the lights on or shutting down operations.
\r\nMany factoring companies offer collection services, which can be helpful if unpaid invoices are impacting your cash flow. While the factoring service is following up on unpaid invoices, you can focus on bringing in new business.
\r\nFactoring may cost you more money than a bank loan, but the requirements are less stringent, which means that even if your business credit score or personal credit score isn't stellar, you may still qualify for factoring.
\r\nYou get several main benefits from partnering with a factoring service:
\r\nFactoring companies charge either a variable or fixed rate, depending on your industry. With variable fees, the factoring company typically charges 1% to 3% of the invoice for as long as it goes unpaid. This charge is known as the discounting rate. If the customer pays quickly, the fees are lower. If it takes longer to collect, expect to pay more. For example, a factoring company could charge 1.15% in the first month and then 0.5% every 15 days the invoice isn't paid.
\r\nWith a fixed-rate plan, which is common in the trucking industry, the factoring company's rate stays the same, whether it takes 10 or 60 days to collect.
\r\nWe recommend that you gather your company information and accounts receivable documents before starting the application process. The information you need to provide varies from one factoring company to the next, but it typically includes your business and personal phone numbers, email address, and details about your business such as your monthly invoicing volume and the sector you operate in.
\r\nMost factoring companies also request an accounts receivable aging report that lists your unpaid invoices, a copy of your articles of incorporation, your business bank account information, and your tax ID number. Factors for certain industries may have specific guidelines and additional requirements that you must meet before being approved for invoice factoring.
\r\nInvoice factoring takes unpaid invoices and turns them into cash so businesses can fund their short-term capital needs. Invoice factoring provides business owners with access to the cash from invoices quickly, helping them bridge the gap as they await payments, which improves their cash flow.
\r\nA factoring agreement is the financial contract that spells out all the costs of factoring, including upfront expenses, maintenance and termination fees. It also explains the consequences if the business can't repay the factoring company. A factoring agreement ensures both parties understand their obligations. Factoring agreements are legally binding for both the factoring company and your business.
\r\nInvoice factoring costs money, which means you'll earn less profit on the invoices you turn over to the factoring company. It's not right for every business, and it's a decision that shouldn't be made lightly.
\r\nInvoice factoring is best if your customers are businesses rather than individuals. Business clients usually pay 30, 60 or 90 days out, and invoice factoring can give you access to cash while you await payment. These are some other scenarios where it may make sense to use invoice factoring:
\r\nFactoring works best for companies that have outstanding invoices and/or customers who don't pay their bills on the spot. When shopping for a factoring company, be mindful of the industry each factor serves; some only work with specific industries. Some common industry specialties for factoring companies are trucking and freight, manufacturing, wholesale, business consulting, and medical offices.
\r\nYour ability to use factoring also depends on the creditworthiness of the customers you serve. It is uncommon for factoring companies to purchase invoices if the customer is a high risk for nonpayment. Some companies also stay away from businesses that have delinquent accounts, while others will only accept accounts that are up to 45 days past due. The industry average is 60 and 90 days past due.
\r\nWith factoring, you sell your customers' unpaid invoices to a lender (the factoring company) at a discount in exchange for a lump sum of cash. The factoring company oversees the collection process; it gets paid when it collects the money from your customers, usually in 30 to 90 days. With a business loan, you borrow money at a fixed or variable rate for a predetermined amount of time, with payments due weekly, biweekly or monthly.
\n"},{"title":"Our Methodology","html":"\nWhen considering factoring services, we looked at two elements: features and eligibility. For features, we considered the rates and fees the factoring services charge and their processes (application, approval and funding). With eligibility requirements, we researched the number of days an invoice can be overdue and the maximum amount a company will factor monthly. We also checked whether the service offered nonrecourse factoring and what types of commitments they require of clients.
\r\nWe scoured websites and contacted dozens of factoring services to get answers to our questions and also to gauge their level of customer support. While some companies weren't as responsive, most of the companies we reached out to quickly responded, supplying the requested information. Overall, representatives from the services we evaluated were knowledgeable and very helpful.
\n"},{"title":"Parting Advice","html":"\nAll of the services we've reviewed are good, reputable companies. However, the best factoring company for your business depends on your needs. Consider the rates and fees of each company, but remember that they're all in the same range.
\r\nAbove all, make sure that factoring is the right step for your company. We recommend a company that offers nonrecourse factoring, such as Riviera Finance. Additionally, weigh how much you need to factor each month and how long you need to factor, as each company varies in what it will accept. American Receivable factors invoices that are 120 days past due while Riviera Finance will factor invoices regardless of how overdue they are. Charter Capital, by contrast, doesn't accept delinquent accounts.
\r\nFinally, consider the support that each company provides. They will, after all, be working with your customers – you want your customers to have a positive experience. Our best customer service experiences were with Riviera Finance and American Receivable. All of the services we've reviewed are solid choices; it boils down to what's best for you.
\n"}]},{"__typename":"SectionContainer","id":"what-to-expect-in-2021","isInToc":true,"type":"container","title":"What to Expect in 2021","container":{"isBuyingGuide":false,"html":"\nUncertainty abounds for small business owners in 2021 with the pandemic raging and political and societal unrest. Banks are reticent to lend, and credit card companies are tightening their credit limits. Alternative lending, including factoring, will continue to fill the void.
\r\nIf history is any evidence, invoice factoring companies should see increased business in 2021. Just like factoring helped small businesses during the 10 years following the Great Recession of 2008, the same is shaping up to be true of the COVID-19 pandemic.
\r\nWith bank loans and new business credit cards harder to come by, small businesses are turning to factoring companies to access capital. That demand is expected to continue in 2021 as cases of coronavirus continue to rise.
\r\nAt the same time, demand in increasing liquidity won't be as abundant as the coronavirus hurts the global economy. That means less factoring loans to support more small businesses. To prevent a cash flow crisis, it's important for small business owners to diversify their funding sources as they head into the new year. Factoring may cover some, but likely not all, of your cash funding needs in 2021.
\r\nMany of the small businesses owners who are shopping for a factoring vendor in 2021 may be worried about their current credit score, as the pandemic has devastated many businesses and wrecked owners' credit scores in the process. The good news is that factoring companies don't care about your credit score. Rather, they care about your invoices and your customers' creditworthiness.
\r\nWhen choosing a factoring company in 2021, be aware that if your invoices are more than 45 days delinquent, some factoring companies may turn you down. Make sure you choose a reputable factoring provider that doesn't overcharge to finance your invoices.
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