We've helped thousands of businesses with invoice factoring, and we hear many of the same questions. Here are clear, honest answers to the 15 most common questions about factoring.
1. Will my customers know I'm factoring?
Yes, in most cases your customers will be notified that their payment should be directed to the factoring company. However, this is standard business practice and most customers are familiar with it. Many Fortune 500 companies regularly pay factoring companies.
2. Does factoring affect my credit score?
No. Factoring is not a loan, so it doesn't appear on your credit report. The approval process doesn't require a hard credit pull on your personal credit either. We evaluate your customers' creditworthiness, not yours.
3. How much does factoring cost?
Factoring fees typically range from 1% to 5% of the invoice value. Your exact rate depends on volume, customer credit quality, payment terms, and your industry. Trucking companies often see rates as low as 1.5-3%.
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4. Do I have to factor all my invoices?
No. With spot factoring, you choose which invoices to factor and when. You can factor a single invoice when cash is tight or factor consistently for ongoing cash flow management. There are no minimums with Factoring Express.
5. How fast can I get funded?
Once your account is set up (typically 3-5 business days), you can receive funding the same day you submit an invoice. Many of our clients receive funds within hours of submission.
6. What if my customer doesn't pay?
This depends on whether you have recourse or non-recourse factoring. With recourse, you're responsible for repurchasing the invoice. With non-recourse, the factoring company absorbs the loss if your customer becomes insolvent. We offer both options.
7. Am I locked into a long-term contract?
Not with Factoring Express. We offer month-to-month agreements with no long-term commitments. You can stop factoring whenever you want without penalties.
8. What types of businesses qualify?
Any business that invoices other businesses (B2B) or government agencies can potentially qualify. Common industries include trucking, staffing, construction, healthcare, manufacturing, and professional services.
9. How is factoring different from a loan?
Factoring is a sale of receivables, not a loan. You're not borrowing money - you're getting paid early for work already completed. This means no debt on your balance sheet, no monthly payments, and no interest charges.
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10. Can startups or new businesses qualify?
Yes. Since factoring approval is based on your customers' credit rather than yours, even brand-new businesses can qualify as long as they have creditworthy customers.
11. What documents do I need to apply?
- Business formation documents (articles of incorporation, etc.)
- Accounts receivable aging report
- Sample invoices
- Customer list
- Government-issued ID
- Voided business check
12. Will factoring help my credit?
While factoring doesn't directly report to credit bureaus, it can indirectly help. By providing steady cash flow, factoring enables you to pay your own bills on time, which does improve your credit over time.
13. Can I factor government invoices?
Yes. Government invoices are some of the most reliable receivables to factor since the government always pays. Federal contracts require an Assignment of Claims filing, which we handle for you.
14. What's the difference between factoring and invoice financing?
Invoice financing (or accounts receivable financing) uses your invoices as collateral for a loan. Factoring is the actual sale of invoices. Financing keeps collection responsibility with you; factoring transfers it to the factor.
15. How do I get started?
Getting started with Factoring Express takes just three steps: check your eligibility online (2 minutes), submit your documents, and get funded. Call us at 855-767-7771 or start your application online today.