Staffing and payroll
Convert approved staffing invoices into cash for payroll, recruiting and operating costs while commercial clients complete their payment terms.
Accounts Receivable Financing
Invoice Factoring for Established B2B Businesses
Convert eligible commercial invoices into working capital without waiting through Net 30, Net 60 or Net 90 payment cycles. Alta Business Loans evaluates and structures invoice factoring requests for established B2B companies with creditworthy customers and verifiable accounts receivable.
Initial pre-qualification has no application fee and does not require a hard credit pull.
Turn receivables into working capital
What is invoice factoring?
Invoice factoring—also called accounts receivable factoring—is generally the sale of eligible unpaid commercial invoices to a factoring company. After verifying the invoices and customers, the factoring company advances an agreed percentage of the eligible invoice value. The customer then pays the assigned invoice directly to the factoring company or a controlled lockbox.
The unadvanced portion is held as a reserve. When the customer pays, the reserve is released to the business after deducting the factoring fee and any contractually authorized adjustments. Because factoring is generally a purchase of receivables rather than a conventional loan, the structure typically does not have a fixed principal-and-interest payment schedule.
Alta Business Loans is an experienced commercial finance brokerage. Our team evaluates receivables quality, customer concentration, invoice terms and working-capital objectives; structures the request across our nationwide commercial finance network; and coordinates due diligence, verification and onboarding. The factoring company independently determines eligible accounts, advance rates, reserves, fees and final approval.
Working capital tied to completed sales
Where invoice factoring can fit
Factoring is most effective when an established business has delivered goods or services, issued valid B2B invoices and needs working capital before creditworthy customers complete their payment cycles.
Trucking and freight
Factor verified freight bills to support fuel, drivers, maintenance and dispatch expenses while brokers or shippers process payment.
Manufacturing and distribution
Use eligible wholesale receivables to fund materials, inventory and supplier obligations during extended customer payment cycles.
Professional and commercial services
Improve cash flow after completing contracted services for established corporate customers that pay on Net 30 to Net 90 terms.
Government contracting
Finance eligible receivables from completed work for approved municipal, state or federal customers, subject to assignment rules.
Growth and seasonal demand
Bridge the timing gap between fulfilling larger orders and collecting invoices so operations can continue without waiting months for payment.
Qualification overview
Typical invoice factoring requirements
Factoring approval is driven primarily by the quality and collectability of the accounts receivable. These are common market requirements—not universal approval standards.
Eligible commercial invoices
The business generally needs valid B2B or business-to-government invoices for completed, accepted goods or services. Consumer invoices, future sales and contingent receivables are typically ineligible.
Creditworthy customers
Customer payment history, commercial credit, financial stability and industry risk are central to approval. Factoring emphasizes the account debtor’s ability to pay more than the owner’s personal credit score.
Current, verifiable receivables
Invoices should be accurate, undisputed and within acceptable aging limits—commonly generated on Net 30 to Net 90 terms. Completed delivery or service performance must be verifiable.
Manageable customer concentration
The factoring company reviews how much of the receivables ledger depends on one customer. Concentration limits, customer-specific credit limits or reserves may apply.
Clear receivables ownership
The business must have the legal right to sell or assign the invoices. Existing blanket liens, accounts receivable liens, tax liens or prior factoring agreements may require payoff, subordination or release.
Invoice support and verification
Customer contracts, purchase orders, time records, bills of lading, delivery confirmations or other proof may be requested to verify each invoice and identify offsets or disputes.
Established business records
A registered operating business, tax identification number, business bank account, ownership records and reliable invoicing or accounting records are commonly required.
Sufficient invoice volume
Minimum monthly volume, invoice size and customer diversification vary. The expected receivables flow should support the facility’s administrative and due-diligence requirements.
No universal personal credit score, annual revenue or time-in-business threshold applies to every factoring facility. Industry, invoice aging, dilution, credit memos, disputes, customer quality, concentration, liens and monthly volume affect eligibility and terms.
Understand the agreement
Invoice factoring structures and documents
The agreement determines which invoices can be sold, who bears nonpayment risk, how customers are notified, what fees apply and when reserves are released.
Recourse factoring
The business remains responsible when an assigned invoice is not paid within the contractual recourse period. This is the more common structure and often carries lower fees.
Non-recourse factoring
The factoring company may assume narrowly defined credit risk, commonly tied to an approved customer’s insolvency. Disputes, offsets, fraud and performance issues are usually excluded.
Selective or contract factoring
Selective factoring may allow individual invoices or customers to be chosen. Contract or whole-ledger facilities may require a recurring volume commitment or broader receivables participation.
What the factoring review examines
Due diligence focuses on whether invoices are valid, assignable and collectible. The factoring company may review payment histories, aging, dilution, credit memos, returns, disputes, customer concentration and the contractual right to collect each account.
Customer communication and assignment
Standard factoring commonly includes a notice of assignment directing customers to remit payment to the factoring company or a controlled lockbox. The tone, verification procedure and collections protocol should be understood before closing.
Know the difference
Invoice factoring vs. invoice financing
Both structures unlock working capital tied to unpaid invoices, but ownership, collections, customer communication, qualification and accounting treatment can differ.
| Feature | Invoice factoring | Invoice financing |
|---|---|---|
| Legal structure | Generally a sale and assignment of eligible invoices | Generally borrowing secured by accounts receivable |
| Collections | The factoring company typically manages payment collection on assigned invoices | The business commonly retains greater control over collections |
| Customer notification | Notice of assignment is commonly provided | May be confidential or less visible, depending on the facility |
| Credit emphasis | Customer credit quality and invoice collectability | Business credit, financial strength and receivables borrowing base |
| Funding mechanics | Advance plus reserve released after customer payment, less fees | Advances or draws against eligible accounts receivable |
| Primary cost | Factoring or discount fee, often affected by time outstanding | Interest and facility fees on the amount borrowed |
Legal and accounting treatment depends on the agreement. Businesses should review the contract with their accountant and legal counsel before assigning receivables or granting a security interest.
Professional brokerage coordination
How the invoice factoring process works
One secure application gives Alta’s commercial finance team the information needed to evaluate the receivables, understand the working-capital objective and structure the request.
Submit the factoring request
Provide ownership, business, customer, invoice-volume and working-capital information through Alta’s secure online application.
Brokerage analysis and structuring
Our team reviews receivables quality, aging, customer concentration, volume and existing liens to identify an appropriate factoring structure.
Due diligence and verification
Alta coordinates documents and communication while the factoring company reviews customers, verifies invoices and completes lien and background checks.
Agreement, assignment and funding
Review the advance, reserve, fees, recourse and contract terms, then complete assignment notices and onboarding before eligible invoices are funded.
Evaluate the complete offer
Invoice factoring rates, advances and fees
Pricing varies by invoice quality, customer credit, volume, industry, concentration, recourse structure and how long customers take to pay. Alta helps clients evaluate the entire factoring agreement—not only the headline fee.
Advance rate and reserve
Published programs commonly describe advances of approximately 70% to 95% of eligible invoice value, with many B2B structures near 80% to 90%. The remainder is held as a reserve.
Factoring or discount fee
Market examples often range around 1% to 5% of invoice value. The actual fee may be outside that range and commonly increases as the customer takes longer to pay.
Recourse and adjustments
Understand the recourse period, chargebacks, reserves, credit memos, dilution, disputes and circumstances that can reduce the final reserve release.
Contract and transaction costs
Review due-diligence, setup, wire, credit-check, invoice-processing, monthly-minimum, renewal, termination and UCC-related charges when applicable.
Frequently asked questions
Invoice factoring FAQs
Clear answers to common questions from established B2B companies evaluating accounts receivable factoring.
What is invoice factoring, and is it a loan?
Invoice factoring is generally structured as the sale of eligible unpaid commercial invoices to a factoring company. The business receives an advance, the customer pays the assigned invoice, and the remaining reserve is released after applicable fees and adjustments. Because it is generally a receivables purchase rather than a loan, there is usually no conventional principal-and-interest payment schedule.
What businesses typically qualify for invoice factoring?
Invoice factoring is generally designed for businesses that sell completed products or services to other businesses or government customers on credit terms and generate verifiable invoices. The customers’ credit quality, invoice aging, payment history, concentration, disputes and existing liens often matter more than the owner’s personal credit score.
What documents are typically needed for an invoice factoring application?
A factoring review commonly requires a completed application, business formation and ownership documents, tax identification, owner identification, an accounts receivable aging report, customer list, sample invoices, customer contracts or purchase orders, proof of delivery or service completion, bank information and details of any existing UCC liens.
How much of an invoice is advanced upfront?
Advance rates vary by industry, customer quality, dilution, invoice age and facility structure. Many published programs describe advances in a broad range of approximately 70% to 95% of eligible invoice value, with 80% to 90% common in many B2B industries. The remaining amount is held as a reserve and released after customer payment, less fees and adjustments.
How are invoice factoring fees calculated?
Factoring fees are commonly based on invoice value and how long the customer takes to pay. Customer credit quality, invoice volume, advance rate, concentration, industry, recourse structure and contract terms also affect cost. Published market examples often describe fees around 1% to 5% of invoice value, but actual pricing may fall outside that range.
What is the difference between recourse and non-recourse factoring?
With recourse factoring, the business remains responsible if an assigned customer invoice is not paid within the contractual period. Non-recourse factoring may transfer specifically defined credit risk to the factoring company, often limited to an approved customer’s insolvency. It generally does not cover invoice disputes, offsets, fraud or performance issues unless the agreement expressly states otherwise.
Will customers know that invoices are being factored?
In standard invoice factoring, customers usually receive a notice of assignment directing them to send payment to the factoring company or a controlled lockbox. Customer verification may also be part of the process. The communication method should be reviewed before signing the factoring agreement.
How quickly can approved invoices be funded?
Initial setup may take several business days or longer while the factoring company reviews the business, customers, invoices, liens and documentation. After onboarding, eligible verified invoices may often be funded the same day or within one to two business days, depending on cutoff times and the agreement.
Does Alta’s initial factoring review require a hard credit pull?
Alta Business Loans does not perform a hard credit pull for its initial pre-qualification review. A factoring company may later review personal or business credit, public records and existing liens as part of due diligence.
Put your receivables to work
Start your invoice factoring review with Alta
Share your business profile, customer mix, invoice volume and accounts receivable details. Our team will evaluate the request and outline the documentation needed for a well-structured factoring facility.
Start My Application →
No application fee. Factoring is subject to receivables eligibility, customer credit review, verification and final approval.