In this article, we review three leading invoice factoring companies and compare where they stand in terms of cost, application process, client contact, and more. We provide our top picks for small businesses. If you are not familiar with invoice factoring, start with our free guide: How Invoice Factoring Works.
Best Factoring Company For More Than $25K: BlueVine
We recommend BlueVine for credit lines of $25K-$500K. They will work with new businesses, offer the lowest invoice factoring rates, and the higher the credit line you request, the better pricing you get. You get a lump sum advance and don’t have to make installment payments because your client pays BlueVine directly (don’t worry — your clients won’t know you’re using BlueVine).
Best Factoring Company For Under $25K: Fundbox
Fundbox issues credit lines between $100 to $100K. They are ideal for small but recurring cash flow gaps. They advance 100 % of your invoice, and you pay it off in 12 weekly installments. You can pay off your Fundbox loan early, and you only pay fees for the amount of time that you borrow.
Best Factoring Companies Comparison Table
What Do I Need
and have at
least a 530
be due and
90 days or less.
business or govt
customers and have
at least 6
months in business.
Pay back the
loan in 12
weeks or less.
Must use online accounting software.
invoices must be
free of liens,
and no serious
legal or tax problems.
Invoices must be
due and payable
within 90 days
Amount You Can
$5K to $500K
$500 to $100K
$10K to $10 Million
How Quickly Can
1 Business Day
Will You Receive
1-3 Business Days
1-3 Business Days
1-3 Business Days
and tax ID
to the business’
bank account or
3 months of bank
SSN of business owner(s)
to your accounting
software. Must use
1 of these:
- QuickBooks Desktop
as address and
A/R aging reports
2.5 % to 5 % per month
1.7 to 2.4 % per month
1.5 to 5 % per month
70 - 97 %
Yes, but payment
details remain in
your business’ name
Will They Contact
Not applicable, but no personal guarantee required
Recourse and non-recourse
Why We Chose BlueVine as the Best Invoice Factor for Advances Over $25K:
BlueVine allows you to convert unpaid invoices into immediate working capital. We like this option for small and midsize businesses that do a lot of invoicing and need to bridge gaps in cash flow to make payroll, buy equipment, etc. Even startup owners and freelancers can use BlueVine if they have at least a 530 credit score.
We recommend BlueVine for credit lines of $25K to $250K. For credit lines under $25K, we recommend Fundbox. BlueVine and Fundbox work a little differently.
Fundbox effectively extends you a short-term loan that must be paid back in weekly installments, whereas BlueVine gives you a lump sum of capital and gets paid by your customer when the invoice is due. BlueVine advances you 85-90 % of your invoice upfront. You receive the rest (minus fees) when your customer pays BlueVine on the invoice. You never have to make any installment payments to BlueVine. BlueVine’s model gives you access to the capital for a longer period of time. In contrast, Fundbox advances 100 % of your invoice but starts pulling money out of your account towards repayment regardless of whether your client has paid the invoice yet.
Each business model has its own pros and cons. BlueVine can help you overcome cash flow gaps because you get a large infusion of cash without having to pay it back week over week. However, things can get messy if your customer doesn’t pay the invoice on time, and you’ve already spent your advance. With Fundbox, you get 100 % of the invoice upfront, and it’s not tied to your customer paying the invoice. However, you do have to make weekly payments.
BlueVine has some advantages over traditional invoice factors. They will not contact your clients. In addition, they keep all payment information in your business’ name, so your clients will not know that you are factoring their invoice.
On their website, BlueVine lists their pricing as 1 % per week/5 % per month. However, the company told us that fees start as low as 2.5 % per month for larger credit lines and repeat customers. The average APR for a BlueVine advance is 40 %.
This is comparable to Fundbox for small amounts of money (under $15K-$25K), but for larger amounts, BlueVine is the least expensive invoice factor.
Why We Chose Fundbox for the Best Invoice Factor for Advances Under $25K:
Launched in 2013, Fundbox has made invoice factoring seamless and affordable. Businesses with at least 6 months of accounting history can qualify, and no credit check is required.
Fundbox advances you 100 % of the value of your invoices, up to $100K, and, you pay back the advance over 12 weekly installments. The advance works like a line of credit, so as you repay, you can keep borrowing against your credit line. A Fundbox loan can be paid off early with no penalties, and you pay fees only for the time that you borrowed the money.
Fundbox is basically a hybrid of invoice factoring and a short-term loan. They extend you a line of credit based on the expected payment of invoices, and you pay back Fundbox in 12 weeks or less. If you can’t afford weekly payments and need a large infusion of capital, we recommend BlueVine. Since a Fundbox loan isn’t tied to your client paying the invoice, FundBox will not contact your clients, and your clients can continue to pay you directly. In addition, a Fundbox loan requires no personal guarantee.
Fundbox has pretty good rates. The APR ranges from 38 % to 54 % depending on the rates that you qualify for. Repeat customers of Fundbox qualify for better rates. However, to use Fundbox, you must use a supported bookkeeping application. If you don’t use one of these apps, we recommend BlueVine even for less than $25K.
When to Use Commercial Capital: Staffing and Transportation Industries & Transactions > $500K
Of the three providers we’re reviewing, Commercial Capital is the most like a traditional invoice factor. Their pricing structure is based heavily on industry and volume.
The factoring rates for Commercial Capital range from 1.5 % to 5 % per month, and they advance between 70 % to 97 % of the invoice upfront. Staffing and transportation businesses qualify for the best factoring rates (1.5 %) and the highest advances (90 % plus) from Commercial Capital. For that reason, we recommend them if you are in one of those industries. See an estimated price list here.
BlueVine caps out at $500K, so we also recommend Commercial Capital for larger transactions. In particular, transactions over $500K qualify for favorable terms.
There are two downsides to Commercial Capital. In some cases (particularly for larger accounts), they charge additional fees beyond the standard discount rates, such as overdue fees if your client is late to pay and mailing fees to contact your clients. Individually, these fees aren’t that high, but they can collectively add up to increase the cost of financing. The second negative to Commercial Capital is that they contact your clients to verify invoices and collect payment on overdue invoices. This can needlessly complicate your customer relationships.
Will I Qualify?
The qualification requirements for invoice factoring companies vary, but most will accept newer businesses and businesses with poor or limited credit history. Two requirements that apply across the board are that (1) you must invoice commercial or government customers for goods or services, and (2) your customers must be creditworthy. Most factors will look into the commercial credit of your customers when deciding whether to accept you as a client. For tips on how to get approved, read 7 Ways to Improve Your Invoice Factoring Application.
How Long Will It Take to Get My Money?
The answer to this questions depend on the speed and ease of the application process. Fundbox and BlueVine have fully electronic application systems, and you can be approved in a day or two. There’s no paperwork that you need to provide. The process takes a few days longer with Commercial Capital because you need to submit appropriate documents, and the documentation needs to be reviewed manually by their staff.
Once you’re approved as a client and you factor an invoice, all three providers advance your funds to you right away, and they will arrive in your bank account in 1-3 business days.
How Much Can I Borrow?
Once you qualify, you’ll be wondering how much you can borrow. Fundbox offers the least amount of capital, but it works like a line of credit. This makes it ideal for businesses with small but recurring gaps in cash flow. BlueVine offers credit lines up to $100K. Commercial Capital will fund even invoices worth millions of dollars.
Some invoice factors require their clients to have a minimum monthly invoicing volume. Fortunately, none of the three providers we’ve reviewed here have minimums. To learn more about minimums, see our guide to invoice factoring.
Fundbox: Credit lines of $100 to $100,000. As you repay, you can continue to borrow against your credit line. Your credit line represents the maximum amount of capital you can borrow at once.
BlueVine: Credit lines of $5,000 to $500,000. As you repay, you can continue to borrow against your credit line. Your credit line represents the maximum amount of capital you can borrow at once.
Commercial Capital: Credit lines of $10,000 to $10 Million. Marco Terry of Commercial Capital did clarify that, “We can go as high as 10M, but realistically, most clients will transition to asset-based lending or bank solutions before they reach that level.”
How Much Cash Will Be Advanced To Me?
Invoice factors typically give you your money in two parts. First, they give you an advance up front. When your client makes full payment on the invoice, you get the remaining balance (minus any fees). The exception here is Fundbox, which advances you 100% of the invoice value.
Fundbox: Advances 100 % of the invoice upfront. You pay back the advance plus the fees that are charged over a 12-week period.
BlueVine: Advances 85 % of the invoice upfront. Customers with creditworthy debtors that are requesting credit lines over $50,000 may qualify for a 90 % advance. After your initial advance, you get the rest (minus fees) when your client pays BlueVine on the invoice.
Commercial Capital: They will advance you 70-97 % of the invoice upfront, depending on the size of the transaction, your industry, and other risk parameters. You will receive the balance of the invoice (minus fees) when your client pays.
What’s the Cost of Invoice Factoring?
The cost of invoice factoring depends on three things:
1. Discount rate –
The discount rate or discount fee is the cost of borrowing money from the invoice factor and is charged on a weekly or monthly basis. Depending on the provider, it can range anywhere from 1.5 % to 5 % per month. It keeps accruing until the factor gets paid on the invoice. This fee is charged on the original amount of the invoice, not on the amount that’s advanced. For example, if you factor a $50,000 invoice at a discount rate of 2 % per month, the fee is 50,000*.02 = $1000.
2. Length of factoring period –
Since the discount rate is charged at regular intervals (e.g. daily, monthly, etc.), you can calculate your total cost of factoring by estimating how long it will take for the factor to get paid on the invoice. For example, say you factor a $50,000 invoice at a 2 % per month discount rate. If your client takes 60 days to pay, you will be charged $2000 in fees.
3. Advance rate and reserve amount –
As mentioned above, money usually comes to you in two parts when you factor an invoice. First, you get your advance rate amount, which is anywhere from 70-97 % of the invoice’s value. Then, you get the remainder of your funds, minus the factor’s fees, once your customer pays the invoice. This balance is called the reserve amount. Suppose you factor a $50,000 invoice at an advance rate of 85% and a discount rate of 2 % per month. In this case, you would receive $42,500 upfront. If your client pays the invoice in 30 days, the factor will pay you a reserve amount of $6,500, bringing the total amount you receive to $49,000. The remaining $1,000 is kept by the factor as its fee.
APR and Other Fees
When you add these things together, the cost of invoice factoring turns out to have an Annual Percentage Rate (APR) around 28-60 %. APR is the cost of borrowing money over the course of one year. This APR is a lot higher than a bank loan, but keep in mind that invoice factors usually work clients who can’t qualify for bank loans or just want short-term capital. It’s also cheaper than merchant cash advances and other short-term loans.
Your APR can be higher if you’re subjected to additional fees. Some factors charge application fees, factoring/processing fee per invoice, late fees if your customer is past due on an invoice, mailing fees for contacting your clients, credit check fees, and more. Look out for these in your factoring contract as they can significantly increase the APR.
With Fundbox, the lowest discount rate is about 1.7 % per month, and the highest discount rate is about 2.4% per month. The average works out to about 2% per month, so getting a $5,000 cash advance for 3 months will cost approximately $300. If you pay back the loan earlier, you will pay a lower fee. The same $5000 advance paid back in 1 month will cost about $100. Fundbox’s APR is between 38 % to 54 %.
Assignment of Invoices/Interaction With Your Clients
Invoice factoring is typically structured so that your customer pays the factor. Fundbox is the exception here; you pay Fundbox directly. However, both BlueVine and Commercial Capital are tied to your client’s payment of the invoice. The customer must pay BlueVine or Commercial Capital instead of paying you. This is called assignment of invoices.
Where BlueVine and Commercial Capital differ is in terms of customer contact. BlueVine avoids direct interaction with your clients, and most customers won’t know that you are using BlueVine. In contrast, Commercial Capital will contact your clients.
Fundbox does not assign your invoices or contact your clients. You directly pay Fundbox in weekly installments until the loan is paid off.
BlueVine will assign your account a new payment address to which your customers can send payment. Fortunately, the address in your business’ name, and your clients can still make checks out to your business’s name. BlueVine also doesn’t contact your clients for any reason.
Commercial Capital‘s standard practice is to contact your clients to assign invoices, verify invoices, and collect payment if the invoice is overdue.
Recourse vs. Non-Recourse Factoring
Invoice factoring can be recourse or non-recourse. Non-recourse factoring means that you’re not on the hook to the invoice factoring company if your customer doesn’t pay for the goods or services received. Sounds great, right? Well, there are usually many exemptions, and protection is generally granted only if your customer can’t pay due to bankruptcy or insolvency. We recommend that you hire a lawyer to look through your factoring contract to understand the exemptions.
With recourse factoring, you must settle the debt with the invoice factor if your customer defaults.
The terminology of recourse/non-recourse doesn’t apply to Fundbox simply because they never rely on your clients for payment. You pay back Fundbox directly like you would a regular loan. One advantage of Fundbox, however, is that they do not require a personal guarantee. This keeps your personal assets safe if your business cannot pay back the loan.
Commercial Capital offers both recourse and non-recourse factoring. They mention that the rates for non-recourse factoring are incrementally higher because it’s riskier for them. In addition, Commercial Capital looks more closely at your customer’s creditworthiness for non-recourse factoring to increase the likelihood of full payment.
Accounting & Invoicing Software
Some factoring services require the use of particular bookkeeping or invoicing applications.
To use Fundbox, a company must use and send invoices via a supported bookkeeping application. QuickBooks (Desktop and Online), Wave, Xero, Clio, FreshBooks, and Harvest are currently supported. If you don’t use one of these systems, you will not be accepted by Fundbox as a client.
BlueVine doesn’t require specific accounting software.
Commercial Capital doesn’t require specific accounting software.
Invoice factoring is a good tool for businesses that need money to fill in gaps in cash flow while they wait for their customers to pay. Fundbox is the best option if you need under $25K because it’s extremely quick and relatively inexpensive. They advance 100 % of the invoice, and you pay back it back like a regular loan over 12 weeks.
For amounts above $25K, we recommend BlueVine, which is also very quick. It’s the most affordable invoice factor for repeat customers and larger transactions. BlueVine is available to startups as well as more established businesses. Most importantly, there are no installment payments to worry about when you use BlueVine because your customer pays BlueVine directly. Neither Fundbox nor BlueVine contact your clients.
If you’re in the transportation or staffing industries, Commercial Capital may give you the best pricing.