How Does Invoice Factoring Work
Factoring sounds complicated, but the process is anything but. Here’s the breakdown.
Step 1: Deliver Goods or Services
You provide your product or service as usual.
Step 2: Submit Billing Documents to the Factor
Instead of waiting for payment, you send the billing documents to Integrity Factoring. We verify the details with your customer to ensure everything is in order.
Step 3: Receive a Cash Advance
Once approved, you get up to 97 percent of the invoice value, typically within 24 hours. That’s cash in the bank, right when you need it.
Step 4: Customer Pays the Factor
Your customer pays us directly, saving you the time and trouble of chasing invoices.
Step 5: Receive the Remaining Reserve (Minus Fees)
Once payment clears, we send you the remainder of the invoice balance, minus a small factoring fee that’s already agreed upon upfront.
Step 6: Close the Transaction and Repeat
That’s it. You move on to your next job or order and keep the cash flow cycle going strong.
What Are the Benefits of Invoice Factoring?
Factoring turns your outstanding invoices into working capital—fast. Here’s how it helps you keep cash flowing and operations moving.
Get Paid Faster without Taking on Debt
Factoring helps you avoid the delays and red tape of loan approvals and credit line limits. You get access to your own earned revenue without taking on new debt.
Easier Approval Than Traditional Loans
We don’t look at your credit, we look at your customers’ creditworthiness. So, even if your business is new or your credit score isn’t perfect, you can still qualify.
Outsourced Collections and Back-Office Support
We handle the billing process and follow-ups, so you don’t have to. Your time is better spent growing your business, not chasing down payments.
Financing That Grows with Your Business
The more invoices you issue, the more capital you can access. There are no borrowing limits like you’d find with traditional financing.
Strategic Flexibility in Cash Flow Management
Cover payroll, take on new contracts, purchase equipment, or simply breathe a little easier knowing your next move isn’t delayed by unpaid invoices.
Seize Growth Opportunities
Factoring gives you the ability to expand operations, hire more staff, or take on bigger clients. Now you can say yes without hesitation.
Tailored Support for Factoring for Trucking, Freight, and Logistics
In the freight industry, cash flow can’t wait. Factoring gives trucking companies, freight brokers, and 3PLs the flexibility to cover costs, stay on the road, and grow without delay.
Why Trucking Companies Rely on Factoring
Long payment terms from brokers can starve trucking companies of cash. Factoring gives you fuel to keep moving. Here’s why trucking companies rely on factoring.
Solving Cash Flow Timing Gaps
Deliver a load today, get paid today. You don’t have to wait 30–60 days just to cover fuel, tolls, or driver wages.
High Advance Rates for Freight Invoices
We specialize in high-advance factoring, with up to 97 percent of invoice value sent within 24 hours.
Fuel Cards, Load Boards, and Added Perks
Integrity Factoring offers perks like discounted fuel cards, access to load boards, and other operational tools to keep your fleet profitable.
Freight Brokers and 3PLs Use It Too
Factoring isn’t just for carriers. Freight brokers and logistics companies also use it to manage receivables and stay cash-positive.
Industries That Commonly Use Factoring
Factoring isn’t limited to one type of business. It’s a flexible financing option used across industries where delayed payments are the norm. Here are some of the sectors that benefit most.
Staffing and Temp Agencies
Cover payroll without waiting on client invoices.
Manufacturing and Distribution
Buy raw materials and manage production cycles more smoothly.
Construction and Contracting
Pay subcontractors and suppliers faster without draining your reserves.
Oilfield and Energy Service Providers
Support high-cost jobs with steady working capital through oilfield factoring.
Medical and Healthcare Companies
Handle operating expenses while waiting for insurance reimbursements.
Government Contractors
Bridge the gap between delivering work and receiving payment from slow-paying agencies.
Other B2B Service Providers
Any business that sells to other businesses and offers net payment terms can benefit from factoring.
How Much Does Factoring Cost?
Factoring fees vary, but understanding how they’re structured and what you get in return can help you make a smart decision. Here’s what to know before you sign.
Typical Factoring Fee Structures
Fees typically range between one and five percent of the invoice value. Rates depend on invoice size, customer risk, and payment terms.
Additional Fees to Look Out For
Setup fees, ACH transfer fees, or early termination fees. Make sure your factor is transparent about the full cost.
Understanding the Value Behind the Cost
Factoring isn’t free, but it’s often far less expensive and far more flexible than a loan or credit card.
How to Compare Cost vs. Benefit
Consider what you gain in speed, flexibility, and reduced stress. If access to capital helps you win bigger contracts or scale faster, the benefit may far outweigh the fee.
Fee Negotiation Tips
Larger invoice volumes, fewer customers, and strong customer credit can help you secure better rates. Don’t be afraid to ask.
What Are the Different Types of Factoring?
Factoring isn’t one-size-fits-all. There are several types, each with different risks, terms, and use cases. Here’s a quick breakdown to help you choose what fits your business best.
Recourse Factoring
If your customer does not pay their invoice and you have a recourse factoring agreement, your business must supply another invoice in its place. This option is standard and typically comes with lower fees.
Non-Recourse Factoring
The factor assumes the credit risk of customer non-payment. You pay a bit more but gain more protection.
Spot Factoring vs. Contract Factoring
Spot factoring is used for occasional invoice funding. Contract factoring typically means you have an ongoing arrangement with consistent terms.
Advance Rate Variations
Advance rates vary by industry, customer risk, and invoice value. We offer some of the highest in the industry.
Notification vs. Non-Notification Factoring
With notification, your customers are aware of the factoring relationship. They receive a Notice of Assignment and are instructed to pay the factor. With non-notification, they’re not.
Factoring vs. Traditional Financing and Other Alternative Funding Options
Factoring offers a faster, more flexible alternative to loans and cash advances. It’s not debt; it’s a way to unlock the money you’ve already earned. Here’s how it compares to other funding options.
Factoring vs. Business Loans
Loans increase debt and often require collateral. Factoring is self-funding and off-balance-sheet.
Factoring vs. Merchant Cash Advances
Merchant cash advances (MCAs) have sky-high interest rates. Factoring is transparent, predictable, and far less risky.
When to Use Factoring Instead of Credit
If your business is growing fast or you need reliable cash flow to cover payroll or buy supplies, factoring keeps you moving without tying you to long-term debt.
Common Misconceptions About Factoring
Factoring is often misunderstood, with myths and outdated ideas clouding its true value. Many business owners hesitate to explore factoring because of these misconceptions, missing out on a flexible financing tool that can power growth and improve cash flow. Let’s clear the air and separate fact from fiction so you can see how factoring might be the right fit for your business.
Factoring Is Only for Struggling Businesses
Factoring isn’t just a safety net for companies in trouble, it’s a strategic choice used by thriving businesses across many industries. Fast-growing companies leverage factoring to unlock working capital quickly, helping them take on bigger projects, hire more staff, and invest in new equipment without waiting weeks or months for invoices to clear. It’s about freeing your cash flow so you can focus on growth, not just survival.
Factoring Is Too Expensive
While factoring does have fees, it’s important to consider what you’re getting in return. Unlike high-interest credit cards or unpredictable cash advances, factoring provides immediate access to your accounts receivable at a predictable cost. Plus, factoring companies handle your collections, saving you time and resources. When you factor in the benefits of improved cash flow and the ability to avoid late payment penalties or missed opportunities, factoring can be a smart financial move.
It’s Difficult to Qualify for Factoring
One of the biggest barriers business owners imagine is qualifying for factoring, but the reality is more straightforward. Factoring companies primarily evaluate the creditworthiness of your customers, not your business credit. If your customers have a strong payment history, you have a solid chance of approval. This makes factoring a valuable option for newer businesses or those with less-than-perfect credit who want reliable financing.
Additional Benefits of Factoring
Beyond addressing cash flow gaps, factoring can improve your business’s financial stability and growth potential. Because you receive funds quickly, you can better manage supplier relationships by paying on time or early, often securing better terms or discounts. Factoring also helps maintain a healthy balance sheet since it isn’t a loan and doesn’t add debt to your books. Many businesses find that factoring simplifies accounting by outsourcing invoice management and collections to experts, reducing administrative burdens.
Choosing the Right Factoring Company
Not all factoring partners are the same. The right company should offer more than just fast funding; it should be reliable, transparent, and aligned with your business needs. Here’s what to look for.
Reputation and Industry Experience
Look for a factor with proven expertise in your industry.
Transparent Pricing and No Hidden Fees
Avoid the surprise fee trap. Integrity Factoring is known for upfront pricing with no fine-print surprises.
Contract Flexibility and Terms
Need short-term funding? A one-time deal? A long-term relationship? Choose a factor that fits your needs.
Customer Service and Account Management
You should be able to call, email, or text your rep and get a fast answer. We assign dedicated account managers so you’re never left hanging.
Technology, Reporting, and Ease of Use
Get funding, track invoices, and review reports with an easy-to-use dashboard. We make it simple to stay on top of your receivables.
Additional Services and Perks
We offer value beyond factoring: fuel discounts, trucking compliance services, tools, and financial support to help your business run smoother.
Take the Next Steps
Factoring can do more than solve short-term cash flow problems; it can become a core part of how your business grows. Here’s how to take the next step with a partner that gets it.
The Strategic Role of Factoring in Business Growth
Invoice factoring isn’t just a cash flow tool, it’s a way to build momentum, take on new opportunities, and stop letting unpaid invoices dictate your pace.
Why Integrity Factoring Is the Right Partner
We focus on fast funding, no-nonsense contracts, and responsive support. Whether you’re in trucking, staffing, or construction, we speak your language and move at your speed.
Get a Free Quote or Consultation
To find out how easy it is to get paid faster, and without the fine print, request your free consultation with Integrity Factoring.