Cash flow is the lifeblood of every B2B company. Whether you operate in trucking, staffing, construction, manufacturing, oil & gas, government contracting, or healthcare, delayed customer payments can stall growth—even when sales are strong.
If your business issues invoices with 30, 60, or 90-day payment terms, invoice factoring may be the working capital solution you’ve been looking for.
In this guide, we’ll break down:
- What invoice factoring is
- How invoice factoring works
- Why B2B companies use factoring
- The difference between factoring and traditional financing
- Whether factoring is right for your business
What Is Invoice Factoring?
Invoice factoring (also called accounts receivable factoring) is a financing solution where a business sells its unpaid invoices to a factoring company in exchange for immediate cash.
Instead of waiting 30–90 days for your customer to pay, you receive most of the invoice value upfront—often within 24 hours.
Unlike a traditional loan:
- There is no long-term debt
- No monthly loan payments
- No new liability on your balance sheet
- Approval is based primarily on your customer’s creditworthiness—not yours
For B2B companies with strong customers but slow-paying terms, invoice factoring converts receivables into predictable cash flow.
How Does Invoice Factoring Work?
The process is straightforward and designed for speed.
Step 1: You Provide Goods or Services
You complete work or deliver products to your B2B customer and issue an invoice with payment terms (e.g., Net 30, Net 60).
Step 2: You Sell the Invoice to a Factoring Company
You submit the invoice to a factoring company like EZ Invoice Factoring.
Step 3: You Receive an Advance
The factoring company advances a large percentage of the invoice value—typically 80% to 95%—within 24 hours.
Step 4: Your Customer Pays the Factoring Company
Your customer pays the invoice directly to the factoring company on the original due date.
Step 5: You Receive the Remaining Balance
Once the invoice is paid, the remaining balance (minus a small factoring fee) is released to you.
That’s it. No waiting. No chasing payments. No uncertainty.
Why B2B Companies Use Invoice Factoring
B2B industries commonly deal with extended payment terms. Meanwhile, expenses like payroll, fuel, materials, and overhead are due weekly—not in 60 days.
Invoice factoring helps bridge that gap.
Common Reasons Companies Use Factoring:
- Rapid growth and increasing payroll
- Seasonal revenue fluctuations
- Large new contracts that strain cash flow
- Slow-paying customers
- Limited access to traditional bank financing
- Startup or limited credit history
Factoring allows companies to grow confidently without turning away new business due to cash constraints.
Industries That Commonly Use Invoice Factoring
Invoice factoring is designed specifically for B2B businesses. Industries that frequently use it include:
- Trucking & Freight Companies – Fuel, driver payroll, and maintenance require constant cash flow.
- Staffing Agencies – Payroll must be met weekly while clients pay in 30–60 days.
- Construction & Subcontractors – Progress billing and delayed payments are common.
- Manufacturing & Distribution – Large purchase orders can create working capital gaps.
- Oil & Gas Service Providers – Long billing cycles and high operating costs.
- Government Contractors – Slow government payment cycles.
- Healthcare & Medical Staffing – Delayed reimbursements create cash flow challenges.
If you invoice other businesses or government entities, you may qualify.
Invoice Factoring vs. Traditional Bank Loans
Many business owners compare factoring to bank loans or lines of credit. Here’s how they differ:
Approval Process
- Factoring: Based primarily on your customer’s credit.
- Bank Loans: Based on your business credit, financial history, and collateral.
Speed
- Factoring: Funding often within 24 hours.
- Banks: Weeks or months.
Debt
- Factoring: Not a loan—no added debt.
- Bank Loans: Creates long-term liabilities.
Growth Flexibility
- Factoring: Funding increases automatically as your sales grow.
- Loans: Fixed credit limits.
For high-growth B2B companies, factoring is often more flexible and accessible.
Recourse vs. Non-Recourse Factoring
There are two primary types of invoice factoring:
Recourse Factoring
If your customer fails to pay, you are responsible for buying back the invoice.
This option typically has lower fees.
Non-Recourse Factoring
The factoring company assumes the credit risk of customer non-payment (due to insolvency).
This option offers added protection but may carry slightly higher fees.
At EZ Invoice Factoring, we help you choose the structure that aligns with your risk tolerance and cash flow needs.
Is Invoice Factoring Right for Your Business?
Invoice factoring is ideal if:
- You sell to other businesses (B2B)
- You issue invoices with payment terms
- You have creditworthy customers
- You need steady working capital
- You want funding without taking on debt
It may not be ideal if:
- You sell directly to consumers (B2C)
- You require very small, one-time funding amounts
- Your customers have poor credit history
Benefits of Invoice Factoring for B2B Companies
Here’s what businesses gain when they factor invoices:
✔ Immediate cash flow
✔ No new debt
✔ Fast approval
✔ Flexible funding
✔ Scalable growth capital
✔ Improved financial stability
✔ Reduced stress over collections
Instead of worrying about when customers will pay, you can focus on operations, sales, and expansion.
How Fast Can You Get Started?
The application process is simple:
- Submit basic company information
- Provide customer details
- Send invoices for review
- Get approved quickly
- Receive funding—often within 24 hours
There are no complicated underwriting processes like traditional banks.
Final Thoughts: Turning Invoices Into Opportunity
Invoice factoring isn’t just about speeding up payments—it’s about unlocking growth.
For B2B companies facing slow-paying customers, factoring provides the stability and working capital needed to:
- Meet payroll on time
- Accept larger contracts
- Invest in equipment
- Hire additional staff
- Scale confidently
If your business is profitable but cash flow is tight, invoice factoring could be the solution that keeps your operations moving forward.
Ready to Improve Your Cash Flow?
EZ Invoice Factoring specializes in fast, flexible funding solutions for B2B businesses across multiple industries.
If you’re ready to stop waiting on unpaid invoices and start growing with confidence:
Contact EZ Invoice Factoring today for a free consultation and same-day funding options.
