Industries
Invoice Factoring for Startups
Get funding to grow. No debt, equity, or bank obligations needed.
Get Started NowWhat's in this guide
- How Does Startup Factoring Work with FundThrough?
- Why Startups Get Funded with FundThrough
- How Do You Choose a Startup Business Factoring Partner?
- How Does Startup Factoring Compare With Other Kinds of Business Financing?
- Is Factoring Right for Your Business?
- Our Approach to Working with Different Industries
According to CB Insights, the top reason startups falter is running out of cash, unable to secure new funding. Their valuation swings with sales, market trends, and operational milestones, not linearly. Even successful sales can lead to cash crunches, as customer payments may lag for months. This cash flow challenge makes finding flexible financing options critical for startup sustainability. Making things even harder for startups, traditional banks often hesitate to lend to them due to perceived risks.
As a small business owner, invoice factoring gives you the working capital you need without adding more debt to your balance sheet, and keep complete control of your company without giving away equity.
How Does Startup Factoring Work with FundThrough?
Securing financing for your startup with FundThrough is straightforward — our process focuses on your customers' credit rather than yours, perfect for startups with limited credit history.
Create or Connect Your Account
In just minutes, you can set up a free account or link your existing QuickBooks or OpenInvoice account, providing basic business details.
Select Invoices for Funding
Easily upload invoices to FundThrough or integrate eligible invoices from QuickBooks, Xero, or OpenInvoice. With no cap on funding, your potential is limited only by the size of your outstanding invoices. Choose the invoices you want to fund and submit them effortlessly with a single click, post-customer setup.
Receive Funding
Once approved, the funds are deposited into your business bank account by the next business day, ready to be used for growth projects, payroll, new equipment, hiring, and more.
See how it works →Ready to self-fund your startup?
Get Started NowWhy Startups Get Funded with FundThrough
FundThrough can be a key ally for startups, offering a suite of benefits tailored to the unique needs of small companies.
Quick Access to Capital
FundThrough ensures your invoices are paid swiftly, often within days, providing the immediate cash flow necessary for startups to thrive.
AI-Powered and Automated Platform
Our cutting-edge AI and automation streamline the funding process, making it faster and more efficient for startups.
Flexible Funding Options
With no minimum funding volume required after your initial funding, startups enjoy unparalleled flexibility to access capital as needed.
Accounting Integrations
With integrations into popular accounting software like QuickBooks, Xero, and Enverus, pulling eligible invoices directly into FundThrough is seamless.
No Dilution or Debt
Stay in control of your company and avoid additional debt while funding your company.
Streamlined Funding Process
Our platform allows for easy invoice submission with just a click, post-customer setup, simplifying your funding journey.
No Long-Term Commitment
FundThrough offers the freedom to choose when to fund, without the constraints of long-term contracts, making it ideal for startups' variable needs.
Easy Application Process
Startups can quickly check qualification, set up an account, and begin without the hassle of extensive paperwork.
100% Advance Rates
We provide the full invoice amount minus our fee upfront, ensuring your startup has the funds it needs without delay.
Transparent Pricing
Our straightforward pricing with a single upfront fee means no surprises, allowing for clear financial planning.
Capability to Take on Growth Projects
Access to working capital means startups can confidently pursue projects that promise significant growth.
Unlimited Funding
Get funding for any amount you have invoices for, ensuring your startup's growth is never capped.
How Do You Choose a Startup Business Factoring Partner?
Choosing a factoring partner is a lot like choosing any lender. It pays to do your homework. There are also several questions to ask prior to starting the application process:
Does the factoring company work with startups?
Most factoring companies work with most industries, but not all. Some factors specialize in only a few industries. FundThrough works with B2B startups across sizes and industries.
Do you have to factor all your invoices?
Many factoring companies require you to fund all your receivables. FundThrough lets you choose which invoices you want to fund.
What advance rates does the factoring company offer?
Advance rates can range from 60% to 100%, depending on the factoring company and sometimes the industry. FundThrough advances 100% of the invoice amount, less a fee.
What is the total price of factoring invoices?
A factoring company should be able to provide what factoring fees it charges in addition to the discount rate, like application fees, services fees, and wire fees. FundThrough offers transparent pricing so you know your pricing before funding. FundThrough charges one up front price.
Does the factoring company have minimums?
A minimum is the amount you must factor every period (month, each quarter or every year). Some factoring companies offer plans that require minimums, while others do not. FundThrough doesn't require minimums. Only fund when you need to.
How Does Startup Factoring Compare With Other Kinds of Business Financing?
In the past, factoring was misunderstood, mostly due to concerns about customer contact and the potential stigma of financial instability it might suggest. The traditional factoring model involves the factoring company reaching out to a business's clients to secure payment on outstanding invoices, leading to worries that such interactions might signal financial distress to customers.
Bank loans, lines of credit, or credit card financing were often seen as more conventional and acceptable methods of funding. Each of these options has its benefits but also comes with limitations, such as interest accrual, the need for collateral, or potential impacts on credit scores. In contrast, factoring provides a swift and effective means to enhance cash flow, sidestepping the traditional drawbacks associated with debt. Today, many successful companies of all sizes choose factoring, and it is, in fact, a well-accepted practice.
Here are a few common forms of business financing along with their advantages and disadvantages. You can also see our article about small business loans for startups for more information.
Loans
Costs for a new and growing business can be significant. You may need to purchase equipment and inventory, pay employees, and keep up with rent, taxes, and marketing. You may consider taking out a business loan to meet these obligations.
Pros
- Many business loans have relatively low interest rates when compared to many other types of funding.
- Interest can be deductible on your taxes.
- Depending on your requirements, you may have access to large sums of money to be used to grow your business.
- On-time repayments can help improve your credit rating.
Cons
- Many small, growing startup businesses don't qualify for loans. They often need cash faster than the process would allow, anyway.
- Most lenders have strict guidelines for loans and a lengthy review process.
- You may need to have a good credit rating. Anything else and you may not qualify, and if you do you'll likely pay a higher interest rate.
- Rates can fluctuate depending on the market. The more you borrow, the higher interest you may have to pay as the lender takes on more risk.
- A startup business loan and the debt will show up on your balance sheet, which can affect the valuation of your business.
Lines of Credit
A line of credit (LOC) is a lot like a credit card. You can borrow/withdraw money up to a certain maximum amount determined by your financial institution. You can cover day-to-day expenses and pay back your debt, only to borrow again when needed.
Pros
- You can borrow when you need it — when you're short of cash, you can borrow only what you need as long as you don't exceed your limit.
- Making on-time payments can help improve your credit score.
- Lines of credit can have low interest rates.
- The payments on the line of credit vary depending on your outstanding balance.
Cons
- As with loans, oftentimes banks won't give small, growing businesses a line of credit. They often need cash faster than the process would allow, anyway.
- There will be limits on the maximum amount you can borrow, which might not always be enough.
- Although you pay-as-you-go, if you miss payments, are late, or move outside the terms of your agreement, you might face high fees.
- It's easy to misuse a line of credit (just like it's easy to misuse a credit card).
- If your business fails, you are responsible for any payments and debt incurred from using your line of credit.
- You need to have been in business at least two years, and will need to provide bank account information, financial statements, tax returns, and more in order to qualify.
- A line of credit is like a loan that needs to be repaid with interest.
Business Credit Cards
Like all forms of funding, business credit cards must be used wisely or things can go sideways very quickly.
Pros
- It's easier to qualify for a business credit card than for a line of credit or business loan.
- You have quick access to the cash you need when you need it.
- Many business credit cards have reward programs or incentives, like cash back or airline miles.
- A business credit card can help build credit, which is helpful if you ever need to apply for a bank loan.
Cons
- You may need to provide a personal guarantee to qualify.
- High interest, annual fees and late charges can add up, especially if funding a large expense.
- Many business credit cards do not offer purchase protection.
- Business credit cards come with security risks like fraudulent charges from unauthorized use and stolen credit card numbers.
- You risk overspending.
Receivables Factoring
Invoice factoring for startup companies is not a loan. The application process is quick, there is no repayment obligation, no high interest rates, and no debt to record on your company's balance sheet. Plus, many more companies will qualify.
Pros
- You have access to quick capital when you need it based on the value of your invoice(s).
- Cash advances can greatly improve shortfalls in cash flow due to slow-paying clients.
- Does not require your business to have a long credit history, which is best for startups and fast-growing firms.
- Factoring relies on the creditworthiness of your customers, not yours.
- Invoice factoring is easier to obtain than most other forms of funding.
- Funding can increase with the value of your invoices.
- If your business is seasonal, factoring can infuse cash into your business to get you through the downtimes.
- Your accounts receivables are used as collateral, unlike many loans or lines of credit.
- You give up no equity or control in your business in exchange for funding with factoring.
- No matter the size of your business, you can use factoring.
Cons
- Invoices need to be verified (customer contact sometimes required).
- Can be complicated to account for in bookkeeping.
Is receivables factoring the right financial move for your business? It's a decision that definitely deserves careful consideration, especially when facing the complexities of startup and small business financing. Here are some questions you can ask yourself:
Is Factoring Right for Your Business?
Unlike the lengthy processing times of bank loans, invoice factoring provides a swift capital infusion, often within a few business days.
Traditional credit options may not suit every business, especially new ones. Invoice factoring offers an accessible alternative, regardless of your credit status.
Factoring is non-dilutive, meaning you keep full control of your business without sacrificing equity.
Your customers settle their invoices with the factoring company, so you're not accruing new debt.
With FundThrough in particular, your engagement ends once your customer pays, offering a clean break without ongoing obligations.
Do you need quick access to cash?
Unlike the lengthy processing times of bank loans, invoice factoring provides a swift capital infusion, often within a few business days.
FundThrough takes the legwork out of accounts receivables financing. Its fully automated platform is easy to navigate, its fee structure is transparent, and a customer service rep is there when you have questions.
Our Approach to Working with Different Industries
FundThrough pays invoices in days for industries outside of this list as well.