Invoice Financing for Small Business
- $825 billion in unpaid invoices in America. Do people owe you money?
- When unexpected expenses arise, and your clients don’t pay on time, utilize unpaid invoices to get a loan for your business.
- Compare invoice financing and invoice factoring options with Upwise, submit your application securely online.
Take advantage of an 85% approval rate - act now!
What is Invoice Financing?
Invoice financing, often called accounts receivable financing, is a type of asset-based financing solution that allows business owners to free up unpaid invoices. Invoice financing companies advance your cash collateralized by your accounts receivable, giving you an excellent way to put money back into your business. With invoice financing, you can get a fast advance of about 85% of the value of your invoices, with most of the other 15% paid to you later.
Invoice Funding Details
8% - 30%
When Customer Pays Invoice
As Fast As Same Day
Up to 100% of Invoice
Invoice Finance Pros vs Cons
PROS
No Need to Wait for Invoice Payment from Customers
Based on Credit of the Invoiced Business
Low Interest Rates
Invoice is Used as Collateral
CONS
Can Be Lengthy Paperwork
Can be Higher Fees than Other Traditional Financing
Invoices Must be from Reputable Companies
Fees are Based on Time it will take for Invoice to be Paid
Business Invoice Finance: What You Need to Know
Invoice financing is a good tool for business owners to use when their clients are not paying their invoices on time. Most business owners have work that is paid on a net 30, 60, or 90 meaning that the invoice will be paid within 30, 60, or 90 days. Billing cycles are different per industry and no two businesses are alike.
Late paying customers can disrupt the day to operations of a business, which can be avoided by factoring in your receivables or money coming in from customers or work completed. The lender is known as a factor or factoring company and typically will lend up to 90% of the invoices being purchased.
The factor is usually repaid once their customers pay their outstanding invoices and will charge a fee based on the amount of financing provided and the duration of repayment. To determine the factor rate underwriting evaluates your business financial history and credit and the credit and payment history of the company’s customers. Other factors such as industry, market projections, quality of the invoice, company reputation, and time in business are taken into account as well.
How does Invoice Financing work?
One of the most frustrating aspects of running a growing business is waiting for your invoices to be paid—especially when some customers don’t pay on time.
And delayed payments mean you don’t get to funnel that capital back into your business right away, tying up your working capital and creating a whole host of trouble.
At Upwise, we see this problem all the time with small business owners. That’s why we offer invoice and accounts receivable financing.
With accounts receivable financing, you have the chance to get paid for your invoices right away—no need to wait.
How Invoice Financing Helps Cash Flow
What if you could guarantee you’ll see cash for those invoices right away?
That’s essentially what accounts receivable financing—also known as invoice financing—can do for your business.
While invoice financing is sometimes a fairly expensive way to fund your business operations, it gives you more predictable cash flow, helping you smooth out your operations from month to month.
If you’re running short of capital or urgently need to meet upcoming expenses—like taxes, payroll, or even getting started on your next project—then invoice financing can ease the burden on your business.
Plus, you’ll definitely sleep better at night with a reliable inflow of cash.
How Invoice Financing Works
Account receivable financing allows companies instant access to capital without jumping through hoops and dealing with long wait times like other loan products. Most account receivable financing lenders will collateralize your outstanding invoices and advance up to 85% of the money owed.
The remaining 15% will be held in reserve and subjected to factor fees associated with the agreement until your customer pays their invoice off.
From that 15%, your lender first collects a processing fee—often around 3%. They’ll then charge a “factor fee” depending on how long it takes for your customer to pay up, almost always calculated on a weekly basis or monthly basis.
For example, many lenders charge 1% in factor fees each month until the invoices factor are paid off.
Then you’ll receive that 15% minus those fees—which are essentially the price you’re choosing to pay for cash now instead of waiting for your customer can complete your invoice.
Simply put: Accounts receivable financing is a convenience fee for your business’s working capital.
A Different Kind of Invoice Financing: Invoice Factoring
Although that’s the typical experience, there are other kinds of accounts receivable financing.
In some cases, we can simply advance you 100% of your outstanding invoices. In return, you pay the lender back weekly over a set period of time—often around 12 weeks—until the advance gets cleared.
In this case, you’re never waiting for the customer to settle your debt, although this sometimes means your lender will collect from your customer instead.
Another type of financing that falls under the realm of accounting receivable financing is invoice factoring.
Invoice factoring is very similar to invoice financing with one notable difference: the invoice factoring company is purchasing your accounts receivables. And in this case, most of these factoring companies will collect directly from your customer on your behalf.
Many accounts receivable financing companies link directly with a company’s accounts receivable records to provide fast and easy capital for accounts receivable balances.
Who Qualifies for an Invoice Factoring Loan?
Any business with a business-to-business model can qualify for invoice financing, as long as they currently have outstanding receivables. Progressive billing cycles will not be considered by factoring lenders.
Here’s the deal.
We don’t care as much about your revenue, profitability, or time in business, the offers are based on the outstanding invoices and credibility of the customers.
Since your outstanding invoices will act as the collateral for the financing, we just need to make sure the invoices make sense for us to finance them. The rest of your business cash flow and business finances aren’t too important in determining the cost.
The maximum amount you can qualify for depends on the total amount and quality of your invoices, as well as on your creditworthiness.
It is important to note that some accounts receivable financing lenders take a look at your credit report as well in making a decision on costs, so the better your credit the cheaper the cost as with most financing products.
Invoices Financing Requirements
From Credible Clients
over 600+
over $150K
1+ years
* Note: These invoice financing requirements are based on previous Upwise customers and is just an average.
Empowering businesses through reliable invoice financing: See what our satisfied clients have to say.
What does a Invoice Financing cost?
As we’ve mentioned, invoice financing can be an expensive way to receive funding for your business but can be looked at as a cost of doing business. For some businesses owners and industries, it is essentially the cost of having cash on hand now to continue operations, instead of later.
Here’s a snapshot of what the cost structure would look like.
Financing & Fees of Accounts Receivable Financing
Let’s say you have a $100K invoice with 30-day terms.
A financing company might immediately advance you 85% of that amount—$85K—and hold $15K in reserve.
Your customer then pays that invoice 2 weeks later. After subtracting the 3% processing fee of $3K, the financing company keeps its factoring fee—1% per week, which in this example is 2% or $2K—and gives you the $10K left over.
Why is Invoice Financing Worth the Cost?
You might be feeling like $5K is a steep price to pay—but that all depends on your business’s financials.
If you needed money to make payroll a week after sending out that invoice, then your accounts receivable financing fees don’t seem too bad after all.
If you have an invoice, that is NET 30, 60 or even 90 days – getting funds immediately could be well worth the cost.
Your business’s financial situation might seriously benefit from extra cash flow—so capital right away could definitely outweigh the negative of those fees.
Invoice Financing vs Factoring
Invoice financing and factoring are both financial solutions that help businesses improve their cash flow by leveraging outstanding invoices, but they differ in their approach and structure. Invoice financing involves borrowing money against unpaid invoices, with the business retaining control over the collection process and customer relationships. The financing company provides a percentage of the invoice value as a loan, which is repaid once the customer settles the invoice. In contrast, factoring involves selling unpaid invoices to a factoring company at a discount.
The factoring company then assumes responsibility for collecting payment from the customers directly. While factoring provides immediate cash and relieves the business of the collection burden, it also entails giving up control over customer interactions. Ultimately, the choice between invoice factoring vs invoice financing depends on the specific needs and preferences of the business, such as the desired level of control, confidentiality, and the urgency of cash flow requirements.
Apply for Invoice Financing Now.
- Don't let outstanding invoices hold you back.
- Tired of waiting for customers to pay? Get a boost!
- Upwise invoice funding can provide you with instant liquidity.
Stay ahead of the curve - get access today!
Documents You'll Need to Apply
Driver’s License
Voided Business Check
Business Bank Statements (Last 4 Months)
Credit Score
You may also be requested to provide the following for larger dollar amounts over $100K:
Invoices & AR Reports
YTD Financials
Business Tax Returns
Personal Tax Returns
In conclusion, invoice factoring is a powerful tool for businesses looking to improve their cash flow and capitalize on growth opportunities. By leveraging financing invoices, companies can access the funds they need through loan invoice arrangements with the best invoice financing providers. Whether you need to borrow against invoices, secure invoice finance loans, or explore sme invoice financing options, there are invoice finance providers ready to help.
With invoices funding, you can obtain a loan on invoice, work with debtor finance companies, and benefit from advanced invoice funding. Invoice loans, invoice lending, and fast invoice finance are all available to help you understand how does invoice financing work and provide the invoice cash advance you need. When you compare invoices finance options from the best invoice financing companies, you’ll find the right invoice funding solution for your business. Don’t let cash flow challenges hold you back – unlock the power of an invoice financing facility today.
Why Upwise for Invoice Finance
Quick & easy application
Our simple 15-minute application gets you on your way to funding quickly. Most applicants receive a fast decision within hours of applying. Then just choose your loan terms and you could have funds deposited into your account as soon as 24 hours.
Ensure you make the wise choice
Every Upwise applicant gets a dedicated funding advisor who takes the time to understand your business and it's unique needs. We are here for your support throughout the entire funding process.
Access multiple financing options
Upwise has an extensive product suite and a network of 100+ lenders. This means you're more likely to find the best match for your funding needs.
