Invoice financing and invoice factoring may sound similar but they are actually different financial solutions. Invoice financing is a type of loan which the business pays back over time. They can borrow an amount based on the invoice value, which acts as collateral for the loan. The bank uses the invoice as security, since if the borrower fails to repay they can get the money from the invoiced customer instead. The business repays a percentage to the bank or third-party institution each month.
However, invoice factoring works a little differently. It’s not a loan and the invoices are not used as collateral. Instead, the third-party company buys the invoices belonging to another business for a discounted value. The business gets a slightly smaller amount than they would have if they’d waited for the loan to be paid by the customer, but they get the benefit of receiving cash up-front to address more immediate requirements.
While these are actually different solutions, it is common for both to require monthly minimums. We are renowned as a leading invoice factoring company thanks to low minimum processing amounts and our commitment to supporting the growth of client companies.