The 7 Best Factoring Companies of 2020

Quick access to non-recourse capital to help fund your business needs

Invoice factoring is a great way to improve your business’s overall cash flow that sometimes becomes sluggish due to slow-paying customers. A factoring company will buy your invoices and provide 80%+ of their value upfront so that you can fund payroll, buy inventory, or meet your other financial obligations. The best factoring companies will provide an advance fee of 90%+ and fund in as little as a single day. 

Typically, you’ll wait 30 to 90 days (65 on average) for your customers to pay the invoices you provide them. If you pay a small fee (5% to 8% of the total invoice amount) you can get the money upfront and often not worry about collecting the money at all. This is the beauty of using an invoice factoring company instead of floating the accounts receivable yourself. 

We evaluated the best factoring companies based on the amount they will factor, what their process is like, how much it will cost you, and the speed at which you can receive the money. The best companies are good at all these things plus have strong customer reviews. Here are our top picks.

The 7 Best Factoring Companies of 2020

  1. altLINE: Best Overall 
  2. BlueVine: Runner-Up, Best Overall
  3. RTS Financial: Best for Trucking Businesses
  4. TCI Business Capital: Best for Slow-Paying Customers
  5. Riviera Finance: Best for Quick Financing
  6. Triumph Business Capital: Best for Staffing Companies
  7. Paragon Financial: Best for Smaller Industries

Best Overall: altLINE

altLine

 altLine

altLINE is a part of The Southern Bank Company, making it a solid option for established businesses looking to factor high volumes of invoices. The bank has factored over $400 million in invoices over 80 years. They can fund up to $5 million and don’t take your personal credit into consideration for qualification. We chose altLINE as the best overall because it is one of the most affordable options around and serves businesses in a diverse set of industries, making it a great option for almost any small business. The only drawback is that they are slow to fund compared to the competition, taking up to seven days. 

Here’s a more detailed breakdown of altLINE’s invoice factoring option: 

  • Maximum Funding Amount: $5 million
  • Advance Rate: 80% to 90%
  • Discount Rate (Pricing): 0.75% to 3% per 30 days
  • Speed of Funding: Typically three to seven Days
  • Revenue Requirements: $350,000+, depending on industry
  • Other Qualification Requirements: Time in business of at least one year
  • Other Funding Options: Asset-based lending, A/R Financing

Runner-Up, Best Overall: BlueVine

Bluevine

 Bluevine

BlueVine is a financing company that offers invoice factoring in addition to a business line of credit. If you need cash quickly, BlueVine might be your best option as they can approve you and sometimes fund in as quick as one day. This is one of the only options that uses your personal credit score as an indicator of your potential repayment success, meaning you’ll need a score of 530 or better to qualify at all. 

With BlueVine, there’s no long-term contract and you can easily apply online. This makes it one of the easiest options to get started with and this combined with their speed of funding make it our runner-up to the best overall. Typically, this is the best factoring company for businesses looking to turn their invoices into cash within one to three days if the business owner has a solid credit history and score. 

Here’s a more detailed breakdown of BlueVine’s invoice factoring option: 

  • Maximum Funding Amount: $5 million
  • Advance Rate: 85% to 90%
  • Discount Rate (Pricing): 0.25% to 1.35% per week
  • Speed of Funding: As quick as 24 hours
  • Revenue Requirements: $10,000 per month
  • Other Qualification Requirements: 3+ months in business
  • Other Funding Options: Business line of credit

Best for Trucking Businesses: RTS Financial

FTS Financial

 FTS Financial

If you’re in the trucking industry, RTS Financial might be your best option. They offer advance rates as high as 97% of your total invoice amount and their familiarity with your business operations helps you get access to more capital, faster. Their rates can be high compared to the competition if you’re in a riskier industry or if the amount you’re looking to factor isn’t under $20,000 per month. 

RTS Financial is the best for trucking businesses in our review because of their ease of use and experience in the industry. The biggest downfall to the funding process is that you cannot apply online and instead must contact the company and wait for a representative to help you through the application process. If you want to get a general idea of your funding options without talking to anyone, this isn’t a good fit for you. 

Here’s a more detailed breakdown of RTS Financial’s invoice factoring option: 

  • Maximum Funding Amount: No official limit, depends on your business
  • Advance Rate: Up to 97%
  • Discount Rate (Pricing): 1% to 5% per month
  • Speed of Funding: As quick as 24 hours
  • Revenue Requirements: No specific requirements
  • Other Qualification Requirements: No specific requirements
  • Other Funding Options: They don’t offer additional funding options that compare to factoring but they do offer a fuel card program with up to $2,500 in the form of a credit line for gas.

Best for Slow-Paying Customers: TCI Business Capital

TCI Business Capital

TCI Business Capital

We chose TCI Business Capital as best for businesses with slow-paying customers because it provides an option for customers to change their discount rate every 30 days, potentially lowering the percentage you’re paying throughout the life of each invoice repayment. This makes it a good fit for businesses needing the pricing to change every month because your customers may not pay very quickly. TCI Business Capital likes established businesses with a lot of annual revenue compared to the competition. 

Here’s a more detailed breakdown of TCI Business Capital’s invoice factoring option: 

  • Maximum Funding Amount: $20 million
  • Advance Rate: 70% to 90%
  • Discount Rate (Pricing): Typically 2% to 5% per 30 days, adjustable every 30 days
  • Speed of Funding: As quick as same day
  • Revenue Requirements: $600,000+
  • Other Qualification Requirements: None provided
  • Other Funding Options: Payroll funding, A/R Financing

Best for Quick Financing: Riviera Financing

RTS Financial

 RTS Financial

Riviera Finance has been providing financial services to businesses since 1969, making them a very established factoring option. Riviera also provides a guarantee funding period of less than 24 hours after verification, which means you’ll never have to wait too long to get financed after you submit your next invoice. This helps make it our top pick as best for quick financing.

Here’s a more detailed breakdown of Riviera Finance’s invoice factoring option: 

  • Maximum Funding Amount: No maximum provided, depends on industry
  • Advance Rate: Up to 95%
  • Discount Rate (Pricing): 1% to 5%, depending on industry
  • Speed of Funding: Guaranteed 24-hour funding after verification
  • Revenue Requirements: Not provided
  • Other Qualification Requirements: Invoices must generally be net 30
  • Other Funding Options: Payroll funding, A/R Financing

Best for Staffing Companies: Triumph Business Capital

Triumph Business Capital

Triumph Business Capital 

Triumph Business Capital specializes in both trucking and staffing factoring options, though they also have options for small to midsize businesses of all industries. Triumph is slow to fund compared to many of the other options on this list, but it's still our top choice for the staffing industry. Their experience might be a good fit for you, and they could offer you a better rate than other factoring companies because of their familiarity with your industry. 

Here’s a more detailed breakdown of Triumph Business Capital’s invoice factoring option: 

  • Maximum Funding Amount: Up to $20 million
  • Advance Rate: Up to 90%
  • Discount Rate (Pricing): 1% to 4% per 30 days
  • Speed of Funding: Can take up to seven days
  • Revenue Requirements: $100,000 annually
  • Other Qualification Requirements: None provided
  • Other Funding Options: None

Best for Smaller Industries: Paragon Financial

Paragon Financial Group

 Paragon Financial Group

 

Paragon Financial is an established factor (25+ years in business) that has worked with more than 2,000 businesses. It is one of the slower funding companies but is a solid option for all types of industries and could be affordable compared to others if you operate in a less familiar industry (not trucking or staffing). These factors make Paragon our choice for best for smaller industries.

Here’s a more detailed breakdown of Paragon Financial’s invoice factoring option: 

  • Maximum Funding Amount: $10 million
  • Advance Rate: 80% to 90%
  • Discount Rate (Pricing): 1% to 3% every 30 days
  • Speed of Funding: Three to 10 days
  • Revenue Requirements: $30,000+ per month, depending on industry
  • Other Qualification Requirements: None provided
  • Other Funding Options: Purchase order financing, A/R financing

What Is Factoring?

Invoice factoring is an accounts receivable financing mechanism for businesses that regularly invoice other companies to get immediate financing for their unpaid invoices due within 90 days, instead of having to wait for their customers to pay. This funding option is best for businesses that have an immediate need for cash to pay bills or make a large purchase, such as inventory. This is not a long-term funding option because it can be expensive if your customers take more than 30 days to pay their invoices. 

Factoring is used by many different industries but the most common are staffing and trucking. These companies typically have a greater need for factoring because of the combination of the sheer amount of invoices they send out combined with their tight cash flows. If you invoice your customers in the amount of at least $20,000 to $50,000, then factoring could be a good option for your business, regardless of industry. 

Factoring vs. Invoice Financing

Both factoring and invoice financing provide immediate cash based on the value of your invoices. The major differences are who ends up collecting the invoices from your customers and how payments are made to the lender. With factoring, the factor or bank buys the invoices from your business and will end up collecting the payment from your customers. 

Invoice financing is more like a traditional loan that provides cash, using your uncollected invoices to determine how much they’ll lend you. You’ll still be in charge of collecting your customers’ payments and you’ll make payments on the money you’re borrowing. With factoring, there is no payment due because the factor buys your invoices. 

How Do Factoring Companies Work?

Factoring companies will buy your customer invoices and actually collect them, if necessary, on your behalf. They will typically pay you in two installments, around 80% of the total value of the invoice upfront, and then the remaining (after they’ve taken their factoring fees) after the invoice is paid to them by your customer. You’ll need to assign your invoices to the factoring company, which may reach out to your customers to discuss the invoices or to collect payment. 

How Much Does Factoring Cost?

Factoring companies carry an APR range of 8% to 70%, but most companies will end up costing you between 25% and 40%. The total cost typically depends on the speed at which your customers pay the invoices. Many factors charge a fee of around 1% per week in addition to a factor fee of $1,000 to $5,000. The most affordable factoring options are pretty expensive compared to most long-term loans but can be a good short-term lending option, as it’s much more affordable than other options like business credit cards. 

When Is Factoring Worth the Cost?

Factoring is primarily worth the cost for two groups of businesses. First, businesses that need to receive cash quickly from their invoices to buy inventory or materials in bulk. Second, though much less common, businesses that don’t have the capacity to collect payments from their customers on a regular basis. Businesses in need of long-term financing won’t find factoring as a viable option. 

Keep in mind that this is a very short-term benefit type of financing. Ari Brown, Principal at ClearThink Capital warns of this point, saying “Factoring tends to have a limited period of benefit for companies. While they do accelerate working capital receipt, after the initial receivable collection period expires, it provides little benefit.” If you’re searching for more long-term financing, you may want to consider other business loan options

How We Chose the Best Factoring Companies 

We looked at more than a dozen of the best factoring companies from all over the country to finalize this list, reviewing each based on factors such as cost, speed, and amount of funding. We also took into consideration reviews from trusted third-party sources and any complaints that have been openly voiced by customers. After considering all of these factors we selected the seven best options. 

Article Sources

  1. Euler Hermes."How Long Does It Take for Customers to Pay Invoices?" Accessed August 26, 2020.