Common questions about invoice factoring for businesses.
What is invoice factoring?
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Invoice factoring is the sale of your unpaid invoices to a factoring company at a small discount in exchange for immediate cash. Instead of waiting 30–90 days for customers to pay, you receive 80–90% of the invoice value upfront. The factor collects from your customers and remits the balance minus a small fee.
Is factoring a loan?
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No. Factoring is the sale of an asset (your receivables), not a loan. No debt is added to your balance sheet, there is no repayment schedule, and there is no interest. It is self-liquidating — the advance is repaid automatically when your customer pays.
How much can I access through factoring ?
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Alliance's factoring network can fund from $25,000 to $5,000,000+ per month depending on receivables volume. There is no fixed ceiling — as your invoices grow, your available funding grows with them. Advance rates are typically 80–90% of eligible invoice value.
What are typical factoring rates?
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Factoring fees typically range from 1.0–3.0% per 30 days, depending on industry, customer credit quality, invoice volume, and payment terms. A $100,000 invoice at a 1.5% monthly fee paid in 30 days costs $1,500 — significantly less than most short-term loan alternatives.
Will my customers know I’m factoring?
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It depends. Notification (disclosed) factoring requires customers to pay the factor directly — they are aware. Non-notification (confidential) factoring keeps the arrangement private. Both structures are available through Alliance. Notification factoring is more common and lower cost.
Do I need good credit to qualify?
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No. Approval is based on your customers’ creditworthiness, not yours. If you invoice creditworthy companies or government entities, you can often qualify even if you’ve been declined for a business loan. This makes factoring one of the most accessible forms of financing for early-stage or credit-challenged businesses.
What industries use invoice factoring?
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Most common: staffing, trucking and freight, manufacturing, construction, professional services, IT, wholesale distribution, and healthcare (medical billing). Factoring works for any B2B business with slow-paying customers. It is not typically available for consumer (B2C) receivables.
How quickly can factoring be set up?
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A factoring facility typically takes 3–7 business days to establish. Once in place, subsequent advances on new invoices fund within 24–48 hours of submission. Alliance can expedite for time-sensitive situations.
Can I factor specific invoices or do I have to factor everything?
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Most arrangements require factoring all invoices from a given customer. However, spot factoring — single invoices on a one-off basis — is available at a slightly higher rate. Alliance works with both full-facility and spot factoring programs.
