Financing 101
Factoring Finance: What It Is & How It Works
Discover how getting your invoices paid in days with FundThrough can help you unblock cash flow and grow your business.
Get Started NowWhat is factoring finance?
Factoring finance — also called invoice factoring or accounts receivable factoring — lets businesses sell outstanding invoices to a factoring company for rapid access to capital. You receive cash, minus fees, before the agreed payment period ends, while your customer pays the factoring company on the original terms.
Factoring isn't just for businesses in trouble. Many use it to fund growth opportunities, make payroll, or bridge gaps when a bank declines a new application. It's also distinct from invoice financing, where the business owner repays the amount plus fees themselves rather than the factoring company collecting directly from the customer.
How factoring fits your financial strategy
Factoring works alongside traditional financial products like loans and lines of credit, giving you a tool to bridge unexpected cash flow gaps — whether from emergencies, seasonal dips, or slow-paying receivables. A common use case is providing a funding boost when a growing business lands a large contract or project requiring upfront capital.
How invoice factoring is used
The invoice factoring industry exists because B2B payment cycles are long. Standard terms often range from 30 to 120 days, creating financial strain for small businesses waiting on payment — especially when their biggest customers are the ones with the longest terms.
Common cash flow gap uses include making payroll, purchasing equipment, paying suppliers, hiring staff, and fulfilling large orders. On the growth side, businesses use factoring to take on more customers, fund growth traditional lenders won't support, and move on time-sensitive opportunities without waiting on bank approval. Run Veggie and Global Pipeline are two examples of businesses that used invoice funding to expand.
How invoice factoring works
Selling accounts receivable at a discount gets you paid faster than waiting out the full payment period.
Submit outstanding invoices for funding
Traditional factors require you to factor all your invoices; FundThrough lets you select which ones to fund, with no minimums, maximums, or long-term contracts.
The factoring company does due diligence
We verify your business is legally established, tax compliant, free of liens, and that the invoice is authentic. We work with many businesses that have tax balances or liens.
Your customer signs a Notice of Assignment
The NOA acknowledges the factoring company's ownership of the invoice and directs payment accordingly. Large companies are used to this process.
You get funded
Cash lands in your account, minus fees, at your advance rate — FundThrough offers advance rates of up to 100%.
Your customer pays the factoring company
On the invoice due date, your customer pays FundThrough directly per the original invoice terms, completing the cycle.
Factoring finance advantages
Quick funding
Get paid within business days instead of months, simplifying cash flow management and accelerating capital deployment.
No bank hassles
Banks frequently reject new businesses without a financial track record. Factoring companies offer a simpler, faster application.
Debt-free, non-dilutive funding
Factoring isn't a loan — it's early payment for work you've already done. You keep full ownership and independence.
Unlimited funding
FundThrough's revenue-based model means funding scales with how much you invoice — the more you invoice, the more you can access.
No long-term commitment
Once a funded invoice is paid, your obligation ends. No strings attached.
Factoring financing disadvantages
Customer contact required
Some business owners worry that customers will read factoring as financial distress. Quality factors, including FundThrough, keep customer relationships professional and low-friction.
Bookkeeping can take getting used to
Recording factoring transactions can feel unfamiliar at first. FundThrough provides step-by-step QuickBooks guidance that applies to most other accounting software too.
Get convenient working capital. Get invoices paid in days.
Invoice your customer. Get paid in days. Get back to business.
Easy access to capital
Unlimited funding availability without bank constraints — for growth projects, essential hiring, and making payroll.
Fast, flexible funding
Skip the wait on net payment terms for quick, secure funding without debt, dilution, hidden fees, or monthly minimums.
Simple funding process
QuickBooks and OpenInvoice integrations, combined with AI and automation, make funding close to a one-click process.
On Google Reviews
FundThrough has been instrumental in helping my company meet its cash flow needs quickly, easily and for low cost.
We started using FundThrough in August of 2017. What impressed me the most has been the quick turnaround.
Overall I have been quite satisfied with FT. I signed up with them about eight months ago and have used the service once. I've also recommended it to other clients.
FAQs
Consider industry experience, speed and efficiency, fee transparency, advance rate, and whether the company is invested in your long-term success.
The advance rate is the percentage of invoice value paid upfront. FundThrough offers advance rates of up to 100%, minus the factoring fee.
FundThrough uses transparent pricing, so you always know the cost before you fund. See our pricing page for current rates.
What should I look for in a factoring finance company?
Consider industry experience, speed and efficiency, fee transparency, advance rate, and whether the company is invested in your long-term success.