A Guide to Finding the Best Invoice Factoring Platform

Invoice factoring platforms give an accessible solution to invoicing

Invoice factoring is a business financing solution that allows B2B owners to receive payments for outstanding invoices within days, not months (30, 60, or 90-day payment terms). An invoice factoring platform is simply the online or cloud-based version of invoice factoring.

Invoice factoring platforms can offer accessibility, transactions that can be approved and tracked with the click of a button, and easy invoice payment solutions for customers.

Within the B2B space, invoice factoring can provide much-needed cash flow and access to capital while offering customers net terms so they can receive their goods and make manageable payments. Learn who should invoice factoring.

Invoice financing vs invoice factoring companies

Invoice financing involves getting a loan to cover the amount of an invoice (or group of invoices) until the customer pays. In this scenario, the company takes on the risk of an unpaid invoice or one that’s outstanding past the due date. The lender takes security in the form of the outstanding invoice and company assets.

Invoice factoring involves selling an outstanding invoice to a third party. The invoice buyer can take on the risk of non-payment (non-recourse factoring) or the seller can take on the risk (recourse factoring).

A different option for invoice factoring

If finding a factoring platform isn’t you, there are alternatives. Resolve is a non-recourse invoice factoring alternative that helps B2B companies offer net terms to their customers while paying out suppliers as quickly as 1 business day after an invoice is issued.

Resolve runs a quiet credit check on each customer that a business wants to offer net terms to. This does not show up on the customer’s credit report, but it gives an excellent overview of the customer’s ability to pay its invoices. Resolve also recommends how much credit to extend to each customer in the form of net terms—a service that’s invaluable for companies who previously struggled with manual credit checks and credit decisions.

When the approval process is done and the sale is complete, a buyer can use Resolve’s white labelled online payment portal to offer their customers easy payment options and payment tracking. This means the customer always has a positive business-buying experience, rather than a third-party platform.

Once the invoice is issued, Resolve pays out up to 90% of the outstanding invoice to the seller within a business day. Resolve offers integration with QuickBooks, WooCommerce, NetSuite, Magento, and more.

Learn 8 reasons why Resolve is better than invoice factoring.

Finding the best invoice factoring software

The best invoice factoring software is different depending on the business and even different industries. These features can help narrow down the choices:

1. How much is the advance rate? The advance rate (a percentage of the invoice value) is how much the factoring solution is offering. Often a higher advance rate results in a higher fee.

2. What are the factoring fees? Beware of companies with ultra-low fees. There can be hidden fees including application fees, factoring fees, and customer service fees, among other fees. Companies with transparent overviews of pricing are often better candidates.

3. What are the online reviews? Speaking of reviews, finding an established factoring company with good reviews is important. Take time to read what others are saying about the company.

4. How fast are payments issued? This should be very clear on the company’s terms of service. If it’s not, that may be a red flag. As a B2B owner, you may need payment in days or may be able to wait a week or two.

5. Does the company offer good customer support? Again, this should be clear in the reviews, as well as your experience when you first reach out to them. The best factoring services offer various support options including phone, email, and live chat.

6. Are the contract terms reasonable and flexible? Check the fine print. Do they require a minimum amount of factoring monthly? Can you choose which invoices to factor? Do the terms meet the unique needs of the business? What is the maximum invoice amount they will factor?

7. Does the platform require a credit check? Some factoring companies will only work with businesses that have excellent credit histories and a minimum credit score. This can be a problem for businesses that are startups, are just beginning to grow, or need to factor invoices because they are having cash flow problems. If this is a concern, ask right away.

Alternatives to invoice factoring platforms

Invoice factoring has pros and cons. Factoring is an age-old process that helps many companies finance transactions that help them ultimately run and stabilize their business. However, many businesses choose to avoid factoring companies for a plethora of reasons such as the risk, the high cost, and the damage it can due to your business. If you fall into this camp, there are plenty of invoice factoring alternatives to consider.

Invoice factoring platforms help all industries—everything from manufacturing to lighting

Every B2B owner has unique business needs, particularly when it comes to factoring. For instance, a small business owner or new business may only need one invoice factored in a quarter. Another business that has much more business may need to factor most of its invoices and will need an API integration to sync to its ERP platform.

Look for an invoice factoring platform that specializes in your industry. The best advice is to check online reviews from G2, Capterra, and other sources. Pay attention to what others in your industry are saying. Ultimately, the best invoice factoring platform will help create the working capital you need while easing the administrative burden on your accounts receivables while growing your sales. Interested in learning more about the most popular factoring alternative solution? Learn why Resolve is better than factoring.