Small businesses need to keep their cash flow looking healthy, but sometimes, it’s your customers that are holding up your business’s success. Late invoices are an issue for companies of all sizes, and when customers don’t want to pay, your accounts receivable can quickly snowball. Invoice factoring might be something you want to consider if your unpaid invoices are starting to make a serious dent in your finances.
What is factoring?
Factoring is a term used to describe invoice factoring, i.e., selling your invoices to a third-party. Invoice factoring companies will purchase your outstanding invoices for close to their full value. This makes invoice factoring companies a fantastic option for small businesses that need to keep their cash flow ticking over.
What are the best invoice factoring companies?
The best invoice factoring companies will be those that can match your requirements. Not all factoring companies will be the ideal match to your business, and some may refuse to work with you based on factors like customer volume and invoice amounts. Here are the top factoring companies for several different circumstances.
Best overall: altLINE
altLINE is one of the top factoring companies overall. It’s the ideal choice for businesses with a large volume of invoices to sell. altLINE offers up to $5 million, and they don’t consider credit scores when deciding whether to work with you or not. This makes them ideal for businesses with bad credit customers. Offering around 80-90% of invoice value, altLINE has over 80 years of experience, making them a reliable choice.
Best for speed: BlueVine
BlueVine can offer advances in as little as 24 hours. They are also one of the accounts receivable factoring companies that are compatible with QuickBooks, which can make the process even smoother. However, BlueVine does have more rules surrounding its services. For example, invoices must come from business customers, not individuals. You must also have a good credit score, and your business must earn a minimum of $100,000 annually.
Best for startups: Fundbox
Many factoring companies may seem inaccessible to startups due to their stringent rules about how much a business needs to be making, or how many invoices you need. That means that accounts receivable factoring companies may not always be the best fit for startups. Fundbox offers factoring to smaller businesses, with advances of up to $100,000. They’ll also cover 100% of an invoice. Fundbox works with a wide range of accounting software for seamless integration, including Xero, QuickBooks, and FreshBooks.
Best for trucking companies: RTS Financial
Not all factoring companies will cover your industry, so you may need to look for specialists. If you’re in the trucking and freight industry, then consider RTS Financial. RTS offers high advances and since they’re familiar with the industry, your application may go more smoothly than with other factoring companies. Decisions can be made in as little as 24 hours and applications are considered on a case-by-case basis, so you may have a better chance with RTS than with a factoring company that has rigid requirements.
Best for smaller industries: Paragon Financial
If you aren’t in the business of trucking or staffing, Paragon might be a good match. Compared to other factoring companies, Paragon is less speedy. However, it does have greater coverage on the range of industries it will work with. Paragon funds up to $10 million and offers 80-90% of invoice value.
We can help
GoCardless helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices. Find out how GoCardless can help you with ad hoc payments or recurring payments.