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Published: Dec 26, 2022 15 min read
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Best for Industry-Specific Services
Best for Same-Day FundingBest for FlexibilityBest for Maximum FundingBest for Small Businesses
RTS FinancialTriumphaltLINETCI Business CapitalAladdin Capital
Maximum Funding

Contact them for a quotation

Contact them for a quotation

Contact them for a quotation

$20,000,000

$2,000,000

Discount Rate

1%-5%

1%-4%

Starts at 0.5%

1%-4%

1%-4%

Advance Rate

Up to 97%

100%

Up to 90%

Up to 90%

95%-100%

Factoring Fees

Contact them for more information

$300 origination fee

0.5%-3% for the first 30 days; increases incrementally every 15 days thereafter

$12.95 for ACH payments

Contact them for more information

Best for Industry-Specific Services
RTS Financial
Get Started
Maximum Funding

Contact them for a quotation

Discount Rate

1%-5%

Advance Rate

Up to 97%

Factoring Fees

Contact them for more information

Best for Same-Day Funding
Triumph
Get Started
Maximum Funding

Contact them for a quotation

Discount Rate

1%-4%

Advance Rate

100%

Factoring Fees

$300 origination fee

Best for Flexibility
altLINE
Get Started
Maximum Funding

Contact them for a quotation

Discount Rate

Starts at 0.5%

Advance Rate

Up to 90%

Factoring Fees

0.5%-3% for the first 30 days; increases incrementally every 15 days thereafter

Best for Maximum Funding
TCI Business Capital
Get Started
Maximum Funding

$20,000,000

Discount Rate

1%-4%

Advance Rate

Up to 90%

Factoring Fees

$12.95 for ACH payments

Best for Small Businesses
Aladdin Capital
Get Started
Maximum Funding

$2,000,000

Discount Rate

1%-4%

Advance Rate

95%-100%

Factoring Fees

Contact them for more information

Invoice factoring is a financial solution that allows businesses to sell outstanding invoices to a factoring company for immediate payment rather than waiting for their customers to pay those invoices. The factoring company collects payment on those customer invoices, retaining a fee for its services. Working with a factoring company helps businesses access cash quickly, especially if they have difficulty obtaining financing from traditional sources like banks.

In 2021, the U.S. factoring industry was valued at $147 billion. The demand for factoring companies continues to increase as businesses look for additional financing alternatives to convert their receivables into cash more quickly.

If you’re looking for the best factoring company for your business, we’ve narrowed the options down to eight by comparing fees, speed of service, term flexibility, and offerings for specific industries. Read on for our reviews of the best invoice factoring companies in America.

Our Top Picks for Best Factoring Companies

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Best Factoring Companies Reviews

Pros
  • Offers up to 97% advance rates on invoices
  • Funding can be ready within 24 hours
  • Fuel card discounts of up to $2,500 per truck per week with credit lines
Cons
  • Some online reviews say its customer service is subpar
  • Must fill out an online application to see pricing
HIGHLIGHTS
Maximum Funding
Contact the company for a quote
Discount rate
1%-5%
Advance rate
Up to 97%
Factoring fees
Contact the company for information

Why we chose it: RTS Financial offers convenient and integrated factoring services, especially for trucking companies looking to gain control over their receivables. Since its inception in 1986, RTS Financial has worked with thousands of trucking companies in the U.S. and Mexico and has become a well-respected market leader.

RTS Financial will advance up to 97% of the total on invoices uploaded through its web-based portal, RTS Pro. It can provide funding in as little as 24 hours and doesn’t charge any hidden ACH or invoice-uploading fees.

Aside from invoice factoring, RTS Financial also provides other services that trucking companies may find valuable. Its Fuel Card program grants companies discounts at over 2,000 fuel stations across the United States. At the same time, its ProTransport software solution is designed to help trucking companies maximize efficiency while minimizing costs.

Military veterans receive additional discounts from RTS Financial.

Pros
  • Fuel card discounts of up to 22 cents per gallon at 2,400+ gas stations
  • Web portal offers credit checks and real-time invoice updates
  • Same-day funding
Cons
  • $300 origination fee
  • Qualification requirements aren't publicly available
HIGHLIGHTS
Maximum Funding
Contact the company for a quote
Discount rate
1%-4%
Advance rate
100%
Factoring fees
$300 origination fee

Why we chose it: Triumph is another factoring company that helps trucking and freight companies access same-day or next-day funding. Whether you own a single truck or an entire fleet, Triumph strives to get your funding ready as soon as possible.

The MyTriumph web portal gives Triumph customers unlimited credit checks on current and potential clients, helping them avoid untrustworthy customers of their own. MyTriumph offers real-time feedback on invoices, alerts you of the invoices that require your attention, and directly connects you with Triumph’s customer support team if you need help.

Triumph doesn't make its qualification requirements publicly available, and you must contact the company to obtain a quote.

Pros
  • Discount rates start at just 0.5%
  • Back-office solutions provide additional help with invoicing and collections
  • Backed by a reputable banking partner (Southern Bank Company)
Cons
  • Origination fee of up to $500
  • Qualification requirements aren't publicly available
HIGHLIGHTS
Maximum Funding
Contact the company for a quote
Discount rate
Starts at 0.5%
Advance rate
Up to 90%
Factoring fees
0.5%-3% for the first 30 days; increases incrementally every 15 days thereafter.

Why we chose it: Operating under the umbrella of the Southern Bank Company, altLINE eliminates the need for an intermediary to access funding. For clients, this means lower costs and greater reliability and trust.

altLINE supports a vast number of industries, including staffing, distribution, manufacturing, consulting, food and beverage, wholesale, textile and apparel, oil and gas, professional services and more. It provides factoring for businesses in the startup phase as well as more mature companies without requiring an established operating history.

altLINE also offers accounts receivable (AR) financing, a valuable addition for companies who prefer to retain control of their payments process.

Pros
  • Flexible monthly contracts
  • Ideal for companies with large invoices, as factoring fees tend to be cheaper
  • Same-day funding
Cons
  • Minimum total invoice value is $50,000 per month
HIGHLIGHTS
Maximum Funding
$20,000,000
Discount rate
1%-4%
Advance rate
Up to 90%
Factoring fees
$12.95 for ACH payments ($19.99 for wire transfer payments)

Why we chose it: Since launching in 1994, TCI Business Capital has helped thousands of businesses across a wide range of industries, including trucking, staffing, manufacturing, telecom and oilfield services. With options of up to $20 million, TCI Business Capital offers some of the highest funding amounts in the industry.

Inside TCI Business Capital’s web portal, you can input your average sales, desired payment terms,and an advance rate of 70%, 80% or 90% to get a real-time quote of the fees you’ll have to pay. TCI Business Capital requires a total minimum invoice value of $50,000 per month, so it’s not a good fit for businesses with lower volumes.

Pros
  • Gives trucking companies fuel discount cards
  • Same-day funding
Cons
  • Factoring fees aren't publicly available
HIGHLIGHTS
Maximum Funding
$2,000,000
Discount rate
1%-4%
Advance rate
95%-100%
Factoring fees
Contact the company for more information

Why we chose it: Aladdin Capital offers tailored factoring for businesses (including fleet factoring) and handles billing and collections for its clients' accounts receivable. Aladdin Capital's fleet factoring program is specifically designed for trucking companies with 10 or more trucks and offers same-day or next-day funding approval.

Aladdin Capital also offers equipment leasing, financing and regulatory compliance services to help take your business to the next level without any costly missteps. You can finance work computers, specialty vehicles, office equipment and more, allowing you to spread out the cost of large purchases over time.

Pros
  • Free credit checks for customers
  • Mobile app makes tracking invoices easier
Cons
  • Negative reviews online about its customer support team
HIGHLIGHTS
Maximum Funding
Contact the company for a quote
Discount rate
1.25%-5%
Advance rate
100%
Factoring fees
1.25%

Why we chose it: TBS offers a range of user-friendly tools and technologies to help trucking companies grow their businesses and manage their finances. These tools include 24/7 live chat, the Get Paid App for independent trucking owners and a fuel finder that provides access to discounted fuel across the U.S.

TBS offers fuel discount cards with savings of up to 90 cents per gallon — a very impressive rate — and same-day payments for invoices. TBS also offers a program that allows clients to finance up to 50% of their truck insurance down payment via eight weekly payments from factored invoices.

Pros
  • Offers fuel card discounts with average savings of 69 cents per gallon
  • Free credit checks with full-service factoring packages
  • Advanced payment system that allows for very fast payments
Cons
  • Qualification requirements aren't publicly available
HIGHLIGHTS
Maximum Funding
Contact the company for a quotation
Discount rate
0.5%-5%
Advance rate
80%-90%
Factoring fees
2% flat charge

Why we chose it: Apex Capital is one of the fastest factoring companies in the industry, quick enough for you to receive payment just minutes after your freight invoices are purchased. The speed is provided by Apex Capital’s new digital payment system, blynk, which ensures you get paid securely and on time.

Apex Capital’s full-service factoring package includes free credit checks, a mobile app with image capture, recourse and non-recourse options, access to its load board for carriers, shippers and brokers, and an Apex TCS Fuel Card for savings of an average of 69 cents per gallon.

Apex Capital provides factoring for businesses 24/7, even on weekends and bank holidays.

Pros
  • Has a team of knowledgeable truckers on staff
  • Factoring packages can be tailored for both single loads and long-term contracts
  • Offers a live chat assistant that can answer some questions about factoring
Cons
  • Negative reviews online about its customer support team
  • Operates as a recourse-only factoring company
HIGHLIGHTS
Maximum Funding
Contact them for a quotation
Discount rate
N/A
Advance rate
Up to 100%
Factoring fees
$5 standard fee, $10 ACH transfers, and $15 wire transfers

Why we chose it: TAFS is one of the leading trucking factoring companies providing reliable accounts receivable (AR) financing. TAFS often provides payment within an hour or two while still providing rates competitive with the rest of the industry.

TAFS’ mobile app allows clients to upload invoices directly from their smartphones and offers truckers fuel discounts, free credit checks and back-office support.

TAFS operates as a recourse-only factoring company, which means that if a customer fails to pay their invoice, you’ll be liable to pay for TAFS’ services.

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Factoring Companies Guide

Main things to know when choosing a factoring company

There are many factoring companies in the U.S., and if you don’t have a good understanding of how to choose one, you might put your business at risk. To prevent this from happening, here are some things you should know when selecting a factoring company for your business.

Factoring companies can be industry-specific

When choosing a factoring company, it's important to consider whether it specializes in your industry. This can be beneficial because industry-specific factoring companies will better understand the challenges and opportunities specific to your business. Among the many sectors factoring companies offer their services to, transportation and construction companies are the most common.

For example, a factoring company specializing in the trucking industry (also called freight factoring companies) may be better equipped to handle the unique challenges and requirements of trucking businesses. If you choose a company with little or no understanding of your industry, the costs may outweigh your savings.

Understanding the entire contract is a must

Before entering into any agreement with a factoring company, it's important to carefully read and understand the contract. This will ensure that you know exactly what you're agreeing to, and help you avoid potential pitfalls or misunderstandings. Pay particular attention to the terms and conditions of the agreement, as well as factoring costs and any additional fees involved. This will save you from any hidden fees now and in the future and allow you to make the most of the services you’re paying for.

Choose either a recourse or non-recourse agreement

Understanding the difference between recourse and non-recourse factoring agreements is essential in choosing the best factoring company for your business. In a recourse agreement, the factoring company has the right to pursue you for payment if your customer fails to pay. In a non-recourse agreement, the factoring company assumes the risk of the customer not paying.

Both types of agreements have their benefits and drawbacks, so be sure to discuss the differences with prospective factoring companies to determine which will work best for your business.

What is the average cost of factoring companies?

On average, factoring companies charge factoring rates around 1%-5% of the amount of the total invoices collected, but this varies based on the industry.

Industry-specific rates are summarized in the table below.

Industry Factoring Rate
General Business 1.15% – 4.5%
Staffing 1.15% – 3.5%
Transportation 1.15% – 5%
Medical 2.5% – 4%
Construction 2.5% – 3.5%

How do factoring companies work?

Factoring companies provide businesses with a way to quickly access cash by purchasing their unpaid invoices. This allows businesses to receive payment for their invoices immediately rather than waiting for customers to pay.

To use a factoring company, a business first sends the company a copy of its outstanding invoices. The factoring company will then advance the business a portion of the invoices, typically between 70% and 90%. The business can then use the cash advance to meet its immediate financial needs.

Once the customer pays the invoice, the factoring company will receive the full payment. The factoring company will then subtract any fees or charges and pay the remainder to the business.

Factoring companies typically charge either a flat fee or a percentage of the invoice for their services. The exact terms and fees will vary depending on the factoring company and the specifics of the agreement.

Factoring can be a useful tool for businesses that need cash upfront and are unable to obtain traditional forms of financing. It can also be a good option for businesses that have difficulty qualifying for conventional loans. However, it's important for businesses to carefully consider the terms and fees of any agreement with a factoring company before entering into a contract.

Why do you need a factoring company?

There are several reasons why it can be a good idea to use a factoring company. First, factoring can provide businesses with immediate access to working capital. This can be especially helpful for companies that need to pay suppliers or meet other financial obligations but are unable to obtain other forms of financing.

Second, factoring can be a good option for businesses that have difficulty qualifying for business loans or lines of credit. This can be because of a poor credit history, a lack of collateral, or other factors. Factoring companies often have more flexible requirements than traditional lenders and can provide financing to businesses that may not be able to obtain it elsewhere.

Third, factoring can help businesses improve their cash flow and financial stability. By selling outstanding invoices to a factoring company, businesses can receive payment immediately, rather than waiting for customers to pay. This can help companies avoid cash flow problems, build up their credit score and improve their financial outlook.

Fourth, factoring can help businesses focus on their core operations. Companies can free up time and resources to focus on other aspects of their business by using a factoring company to handle their invoicing and collections.

While factoring may not be the right funding option for every business, it can be a valuable tool for businesses that need immediate access to cash, have difficulty qualifying for traditional loans or want to improve their cash flow and financial stability.

Factoring companies FAQs

What is the best way to record payments from a factoring company?

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The best way to record payments from a factoring company is to create a separate account in your accounting system specifically for factoring transactions. This will allow you to easily track and manage these transactions separately from your other financial activities, ensuring they're properly accounted for in your records.

First, create a new account in your system using an appropriate name such as "Factoring Receivables" or "Factoring Receipts." Once the account is created, you can use it to record all of your transactions with the factoring company.

When you receive a payment from the factoring company, record it as a credit to the factoring account and a debit to the cash account. This will increase the factoring account's balance and decrease the cash account's balance, indicating you've received payment from the factoring company.

You should also record any fees or charges associated with the factoring transactions. These can be recorded as a debit to the factoring account and a credit to an expense account, such as "Factoring Fees."

What are the record-keeping duties of a factoring company in the U.S.?

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Factoring companies in the U.S. are responsible for keeping detailed records of their financial transactions. Their record-keeping duties begin when a client business submits all the information regarding their accounts receivable. This is a crucial process as it dictates whether or not the company is eligible for factoring services.

It also needs to keep records of any fees or charges associated with its services, such as interest or service charges. Every factoring company should maintain accurate records of the accounts receivable it purchases from its clients, as well as the payments it collects on those accounts.

Factoring companies also need to keep track of their clients' creditworthiness and provide regular reports on their accounts' status. These record-keeping duties are essential for ensuring the smooth operation of the business and meeting regulatory requirements.

How can I cancel my factoring company service?

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The process for canceling a factoring company's service can vary depending on the terms of your contract and the company's policies. Generally, it's best to review your contract carefully and communicate openly with the factoring company to ensure that the cancellation process goes smoothly.

In general, the first step to cancel your contract with your factoring company should be to inform it of your intention to terminate the service. You'll likely need to provide written notice of your decision via email or postal mail. Carefully review the terms of your contract with the company, as it may specify a minimum notice period or other requirements for canceling the service.

Once you've notified the factoring company of your intention to cancel, you'll need to provide it with a list of all outstanding accounts receivable that have been sold to it. It will then work with you to collect any remaining payments on those accounts and finalize the cancellation process. Follow any instructions the factoring company provides to ensure the cancellation process goes smoothly.

In some cases, you may be required to pay a cancellation fee or other charges if you terminate the service before the end of the contract period.

How do I list the invoices I sell to a factoring company on my taxes?

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The IRS has a way of analyzing receivables that use a factoring company's services. In determining the tax liability from this type of financing, the following information is required:

  • Name and location of the factoring company
  • Relationship between the seller and factoring company
  • Whether both parties are part of a consolidated group
  • Name of the accounting firm that may have assisted in the factoring agreement
  • Type of factoring agreement
  • Business tax returns of the seller company
  • Securitization process, if any
  • In some cases, you may be able to claim certain deductions or credits related to the sale of the invoices, such as interest paid on the accounts receivable or fees charged by the factoring company.

    You may also need to provide documentation to the IRS to support the income you've reported from selling invoices to a factoring company. This may include copies of the invoices sold, as well as any contracts or other agreements related to the sale.

    Overall, it's best to consult with a tax professional or refer to the IRS guidelines for specific information on how to properly report the sale of invoices to a factoring company on your taxes.

    What type of businesses use factoring?

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    While any type of company is welcome to try the services of a factoring company to help improve their cash flow, factoring is most common in the trucking and freight, manufacturing, energy and oil, telecom, staffing, construction and commercial food service industries.

    How long does it take to qualify for a factoring company?

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    Overall, the length of time it takes to qualify for a factoring company varies depending on the specific requirements of the company and the complexity of your situation. Generally, applying for and obtaining approval for factoring can take anywhere from a few days to several weeks.

    The first step in the qualification process is to submit an application to the factoring company. This typically involves providing information about your business, such as your industry, the size of your company and the type of products or services you offer. The factoring company will use this information to assess your eligibility for its services and to determine whether you meet its credit criteria.

    Once your application has been submitted, the factoring company will review your information and conduct a credit check to assess your financial health and creditworthiness. This process can take several days or even weeks.

    If your application is approved, the factoring company will provide you with an agreement outlining its services' terms and conditions. This will typically include information on factoring fees and any other requirements or restrictions. Carefully review the terms of the agreement and ask any questions you may have before signing.

    How we found the best factoring companies

    Invoice factoring can help business owners increase cash flow quickly, but a big part of the process is choosing the right company to work with. These are the factors we considered when preparing this list:

    Maximum funding

    When deciding what factoring company to work with, it's essential to know maximum funding amounts they can provide. You may have better odds of approval with factoring companies that have higher funding limits, as they tend to have a sizable amount of money ready to fund multiple contracts.

    Discount rates

    Discount rates are the payments made for a factoring company’s services. We sought out companies offering low discount rates without sacrificing service quality.

    Advance rates

    Advance rates are the percentages a factoring company is willing to extend to its clients. We favored factoring companies with higher advance rates.

    Factoring fees

    Aside from the discount rates charged, other factoring fees are sometimes added to the overall cost of a service package. These include transfer fees (ACH or wire) and origination fees for new customers. We looked for companies who are upfront about the fees they charge.

    Summary of the best factoring companies of 2023