Texas Commercial Loans

A Study on Different Forms of Invoice Finances A Study on Different Forms of Invoice Finances Invoice factoring and invoice financing, similar but different solutions for collecting receivables, are two ways to keep cash coming in, even when customers aren’t paying their outstanding invoices. Invoice factoring works by taking ownership of outstanding receivable invoices due to your business and collecting through a third-party, called a “factor.” The third-party collector or factor pays you the entire amount of the invoice, minus a small fee (generally 1 percent to 5 percent). That’s it; you are paid the money due and the invoice factoring company collects the receivable from the owing party. Invoice financing, is somewhat the same because it does charge a fee. However, it works differently. Your business is advanced 100 percent of the outstanding invoice amount and repay the short-term advance over a period of weeks or months, plus a fee. Unlike an invoice factor, though, you