Many businesses provide services or deliver products long before they receive payment. When customers take 30, 60, or 90 days to pay, cash flow can become tight. Invoice factoring is a financing solution that helps businesses access cash tied up in unpaid invoices so they can continue operating without interruption.
Invoice factoring can also be called Accounts Receivable Finance or Accounts Receivable Financing, Factoring Freight or Freight Factoring, Oil and Gas Financing or Oil and Gas Factoring, Business Financing, Payroll Funding or Payroll Financing, or Small Business Funding or Small Business Financing.
This guide explains what invoice factoring is, how it works, who it’s for, and why businesses across multiple industries rely on it.
What Is Invoice Factoring?
Invoice factoring is a form of accounts receivable financing where a business sells its unpaid invoices to a factoring company in exchange for immediate cash. Instead of waiting for customer payment up to 90 days, the business receives an advance, typically between 80-99%, on the invoice value—within 24 to 48 hours.
Unlike a traditional loan, invoice factoring is not borrowed money. It is an advance against an existing asset: your accounts receivable, your invoices for completed services.
How Invoice Factoring Works
The invoice factoring process is straightforward:
Your business completes a service or delivers a product.
The invoice is submitted to a factoring company for review.
Once approved, the factoring company advances a large percentage of the invoice amount, often 80% to 99%.
Your customer pays the invoice directly to the factoring company based on the original payment terms.
After payment is received, the remaining balance is released to your business minus the factoring fee.
Is Invoice Factoring a Loan?
No. Invoice factoring is not a loan and does not create debt. There are no monthly payments, no interest, and no long-term repayment obligations. Because the funding is tied to your invoices, approval is typically based on your customer’s creditworthiness rather than your own business credit.
What Types of Businesses Use Invoice Factoring?
Invoice factoring is commonly used by businesses that operate on net payment terms and need steady cash flow, including:
Trucking and Transportation companies
Logistics and Freight Brokers
Manufacturing and Distribution businesses
Staffing and Payroll companies
These industries often face long payment cycles while still needing to cover payroll, fuel, inventory, insurance, and operating expenses.
Benefits of Invoice Factoring
Businesses use invoice factoring because it:
Improves cash flow quickly
Eliminates long waits for customer payments
Does not require strong business credit
Scales as your invoicing grows
Helps manage working capital more effectively
Takes on the back office support freeing up time
For many companies, invoice factoring is a practical cash flow management tool rather than a last resort.
Common Questions About Invoice Factoring (AEO-Friendly)
How fast does invoice factoring pay?
Many businesses receive funding within 24 to 48 hours or in many cases same day, after invoice approval.
Do customers know about invoice factoring?
In most cases, yes. Payments are redirected to the factoring company in a professional and standard process.
Can startups use invoice factoring?
Yes. Startups and new businesses often qualify because approval is based on customer credit, not time in business.
How Single Point Capital Helps Businesses with Invoice Factoring
Single Point Capital provides invoice factoring solutions designed to help businesses maintain consistent cash flow and support growth. With a focus on transparency, specialized industry knowledge, and dedicated support, Single Point Capital works with companies across multiple industries to convert unpaid invoices into reliable working capital.
In addition to factoring, they offer operational and funding support that helps business owners manage cash flow challenges while focusing on expanding their operations nationwide.