Invoice Factoring for Small Business: Turn Unpaid Invoices into Fast Cash

That’s where invoice factoring comes in. At Lending Valley, we help you unlock the money trapped in your unpaid invoices so you can pay expenses, seize growth opportunities, and keep operations running smoothly, all without taking on traditional debt.

Thankfully, modern and nontraditional financing options, like invoice factoring, are beneficial. They provide small business owners with an opportunity to leverage one of their most valuable assets into a predictable and consistent cash flow to build, grow, and leverage new opportunities.

What Is Invoice Factoring, Anyway?

Invoice factoring is not a traditional loan. Instead, it’s a financing solution where you sell your outstanding invoices to a factoring company in exchange for immediate cash.

Here’s how it works:

You issue an invoice to your customer (usually with 30–90 day terms).

Instead of waiting, you sell that invoice to us.

We advance you up to 85–90% of the invoice value within 24–48 hours.

We collect payment directly from your customer.

Once paid, you receive the remaining balance minus a small factoring fee.

👉 Unlike bank loans, approval is based on your customers’ creditworthiness, not your own. This makes factoring ideal for businesses with limited or challenged credit history.

Example: How Invoice Factoring Works

Let’s say your business issues a $10,000 invoice with a 30-day payment term.

Instead of waiting a month, you factor the invoice.

Lending Valley advances you 85% upfront ($8,500), minus a small fee (say 3%).

Once your customer pays, you receive the remaining balance (around $1,500) minus the fee.

Result? You get immediate working capital without waiting for customer payments.

Advantages of Invoice Factoring

Immediate cash flow – No more waiting weeks or months for payments.
✔ Works with bad credit – Decisions are based on your customers’ ability to pay, not your credit score.
✔ No collateral required – Your invoices act as the asset.
✔ Easy approval – Faster than applying for traditional bank loans.
✔ Predictable cash flow – Plan expenses with confidence knowing funds arrive quickly.

Things to Consider for Invoice Factoring for Small Businesses

⚠️ While invoice factoring is powerful, it’s important to understand:

Costs may be higher than bank loans (factoring fees usually range 1%–5% per month).

Customer interaction – Your clients may be notified since the factoring company collects payment.

Invoice quality matters – Approval depends on your customers’ payment history and reliability.

Recourse factoring – In some cases, if your customer doesn’t pay, you may need to replace or buy back the invoice.

At Lending Valley, we’re fully transparent about costs and terms, so you’ll always know what to expect.

Who Benefits Most from Invoice Factoring?

Invoice factoring is especially useful for B2B businesses that bill clients on net terms, such as:

Trucking and logistics companies

Manufacturers & wholesalers

Staffing agencies

Professional service firms

Construction subcontractors

If waiting for client payments is slowing down your growth, factoring can keep your cash flow steady.

Invoice Factoring vs. Invoice Financing

It’s easy to confuse the two, but here’s the difference:

Invoice Factoring – You sell invoices to a factoring company. They advance funds and collect payment from your customer.

Invoice Financing – You borrow against invoices but still handle collections yourself. Repayment works like a loan with interest.

👉 Choose factoring if you want hands-off collections and faster funding, or financing if you prefer to keep control of customer payments.

Invoice Factoring FAQs

Q: Is invoice factoring a legitimate service?

Yes. Factoring is a well-established, regulated financing option trusted by thousands of small businesses worldwide.

Q: How much of my invoice value will I get upfront?

Most businesses receive 70–90% of invoice value within 24–48 hours.

Q: Will my credit score affect approval?

Not much. Factoring approval is based on your customers’ payment reliability, not your own credit history.

Q: How quickly can I get funded?

Once approved, you can receive funds in as little as one business day.

Q: Will my customers know?

Yes, since the factoring company collects payment directly. At Lending Valley, we manage this professionally to protect your customer relationships.