As a small but growing business, you might be a bit short on cash. Even if business is booming, you’ll still be offering Net 30, 60, or even 90 payment plans to your clients. This is where invoice factoring services come in. With that in mind, here are 7 of the best invoice factoring companies to consider.
This type of financing is a way for small businesses to secure the (nearly) full amount of a net invoice before the client has actually paid it off.
Basically, you’ll be selling the invoice to a factoring company for (typically) 80%-90% of the full amount owed. From there, the factoring company will collect the full amount from your client over the original period of time you agreed on.
Invoice Factoring: Why Do It?
For many companies, invoice factoring is a better option than taking out business loan after business loan. It is:
- More cost-effective
- Easier to get approved
- Less risky — especially when working with companies that offer non-recourse factoring
We’ve already delved into what invoice factoring is and why small businesses should consider using it.
(We’ve also talked about what invoice factoring isn’t.)
Here are 7 of the best invoice factoring companies.
BlueVine’s invoice factoring service promises “more capital with full flexibility” to growing and established business-to-business (B2B) companies.
As long as your B2B company has been in business for more than three months, has a FICO score of 530 or higher, and generates at least $10,000 in monthly revenue, you’ll easily be able to secure funding through BlueVine.
BlueVine offers incredibly speedy service, providing established companies with funding within 24 hours. That said, the initial process may take up to 7 days, but a 2-day turnaround is fairly common.
BlueVine provides factoring lines of up to $5 million but works with companies that need lines as low as $5,000. Depending on the factoring amount and the company’s financial standings, BlueVine will provide 85%-90% of funds upfront — providing the rest once the invoice has been paid in full.
BlueVine’s rates are highly competitive, with established companies receiving rates as low as .25% a week.
One thing to note is that BlueVine doesn’t take responsibility for collecting invoices, themselves. So, while you’ll have sold your customer’s invoice to BlueVine, you’ll still need to ensure they pay it in full.
2. Paragon Financial
Paragon Financial, an eCapital company, works with fast-growing B2B and B2G (business-to-government) companies in need of working capital, and who aren’t interested in bank financing.
After an initial verification process, the team promises up to 90% funding within 24 hours of submitting an invoice. Creditworthy fund seekers who have an established relationship with Paragon often receive rates as low as 1% a month.
As we said, Paragon serves fast–growing companies.
Perhaps its biggest selling point is Paragon offers non-recourse invoice factoring. This means your business won’t be held responsible if a client goes bankrupt or out of business before paying their invoice in full.
Paragon, then, is a great option for businesses with new clients who may still be establishing their financial trustworthiness. Paragon also can help established businesses with higher-value clients and longer net payment terms in place — allowing them to collect large sums of cash with minimal risk to their company.
3. Riviera Finance
Riviera Finance’s invoice factoring services are another option for small companies with immediate cash needs and an increasing client list.
What stands out most about Riviera is the generous invoice advance policies: On average, Riviera pays out 92% of each invoice it receives — in some cases paying out as much as 95% of a given invoice.
At an average of 2% a month, Riviera’s rates are in line with the industry standard. Of course, teams can secure lower rates as they establish a trustworthy relationship over time.
Like Paragon Financial, Riviera offers non-recourse factoring, guaranteeing financial stability should a company’s clients be unable to pay their invoice as expected.
Riviera also offers a quick turnaround from application to funding, with clients saying they were approved within 48 hours of applying. From there, Riviera guarantees funding within 24 hours of invoice submission.
One thing that stands out about Riviera is that it works with small companies that may not have an established monthly revenue as of yet. This means less time spent on hitting a quota for external purposes, and more time spent on growing revenues across the board.
Riviera also offers 24/7 service and support, along with invoice management and assistance.
AltLINE prides itself on serving businesses in a number of industries, in nearly any stage of growth and with a variety of financial needs.
altLINE advances up to 90% of an invoice — a normal range for invoice factoring providers serving companies with higher monthly revenue. altLINE will factor up to $4 million in monthly invoices. The provider’s average customer receives about $500,000 from the service every month.
Established companies in good financial standing can receive rates as low as .5% per month. However, companies must contact altLINE for more information regarding rates and minimum revenue requirements.
For companies with steady recurring revenues — whether from a handful of large clients or a number of smaller customers — altLINE offers a trustable source of funding with a proven track record of success.
(Note: Payplant refers to its services as invoice financing, but a quick look at the process shows it’s financing is more in-line with invoice factoring.)
Payplant offers an incredibly flexible invoice factoring service for small to midsize businesses — with special attention paid to Illinois state vendors.
Payplant requires no monthly minimums or any other minimum stipulation. The service will pay 80%-90% of your invoices upfront; Illinois state vendors are likely to receive 90%. In some cases, Illinois state vendors may actually receive the entire invoice amount immediately.
However, Payplant’s approval process is a little slower than most others on this list. On average, first-time clients will need to wait about 72 hours to receive approval from Payplant’s team. From there, funding typically takes only 24 hours to go through.
Payplant offers rates as low as 1.2%, making it a prime option for small businesses looking to secure funding on the cheap. Even better, Payplant offers zero percent rates to Illinois state vendors.
As mentioned, Payplant’s services are best-suited to small to midsize businesses — but a $1 million factoring cap means midsize businesses may eventually outgrow the company. Still, Payplant is an incredibly affordable and reliable option up until your company hits this massive financial milestone.
(And, if you’re a vendor based out of Illinois, the perks offered by Payplant may make it the best option for your business.)
6. TCI Business Capital
With a minimum monthly revenue requirement of $50,000 (and a max of $10 million), TCI’s invoice factoring services are definitely focused on serving more established and successful businesses.
Companies that meet this requirement, though, can be approved in as little as 15 minutes to receive as much as 95% of their outstanding invoices. While TCI’s factoring calculator uses a standard 2% rate as an example, actual rates are given on a case-by-case basis.
TCI ranks amongst the more transparent invoice factoring providers on our list, offering multiple FAQ pages related to the process. This can help teams better understand their financial options — and show them just how they’ll benefit from TCI’s services.
7. Triumph Business Capital
Triumph Business Capital provides financing to companies in a variety of industries, including:
- Transportation and logistics
- Oil, gas and energy
Triumph also offers financial services tailored to small and mid-sized businesses.
As with TCI, Triumph provides much information about what invoice factoring is, and how companies can find the financing that fits their needs.
With Triumph, companies can potentially get rates as low as 1.5% while receiving up to 97% of their factored invoices. In most cases, Triumph aims to deliver funding within 24 hours of receiving an invoice.
Which Invoice Factoring Provider is Right for You?
Most high-quality invoice factoring services provide similar levels of value. So, it’s crucial to pay attention to the nitty-gritty details of each.
As a smaller company, your best bet is to look for an invoice factoring partner that:
- Has minimal (or no) requirements regarding revenue, credit score, or time in business
- Offers the highest possible funding amount
- Will work with your team to get you the lowest possible discount rate from the get-go
For growing, midsize companies, you’ll want to find an invoice factoring provider that:
- Allows scalability via high funding limits
- Offers non-recourse funding, allowing you to mitigate potential financial risks
- Has an established track record of working with companies of your size in your industry
You also need to know whether invoice factoring is the best way for your business to secure funding for the present. With so many options on the table — and so many variables impacting your business at any given moment — this isn’t a decision to take lightly.
In short, you need to find the solution that makes the best financial sense for your business.
Luckily, you don’t have to figure this all out on your own. Fast Capital 360’s small business loan calculators can help you determine which financing option is right for you — and which will lead to the best opportunities for growth in the future.
You may find that a small business loan is your team’s best option for the present moment. In that case, head on over to our application page to get the process started, and secure the funding you need to spur growth immediately.