How much of the invoice do I get up front?

Most factors advance 80–90% of the invoice within a day or two, then release the remainder — minus their fee — once your customer pays.

What does invoice factoring cost?

Usually a percentage of the invoice value per 30 days outstanding, plus possible reserve holdbacks or monthly minimums. The slower your customers pay, the more it costs.

No. You're selling an asset — the invoice — not borrowing against it, so it doesn't add debt to your balance sheet the way a loan does.

Invoice Factoring in Canada | Crewline

How invoice factoring works

You invoice a creditworthy customer, then sell that invoice to a factor. The factor advances a large share of the face value — typically 80–90% — within a day or two and takes over collecting the receivable. When your customer pays, you get the remaining reserve balance minus the factoring fee. Because the factor is really underwriting your customer's ability to pay rather than yours, factoring is available even to young businesses that couldn't qualify for a bank line. It scales naturally with your sales: the more you invoice creditworthy customers, the more cash the facility can release, which makes it a good fit for a business growing faster than its bank will lend.

Recourse vs non-recourse, and what it costs

With recourse factoring you buy back any invoice the customer ultimately doesn't pay; it's cheaper because you keep the credit risk. Non-recourse shifts that risk to the factor for a higher fee, but read the fine print — non-recourse usually only covers a customer's insolvency, not a disputed invoice. Cost is typically a percentage of the invoice per 30 days outstanding, so the real price depends on how slowly your customers pay: a 2% fee on a 30-day invoice is very different from 2% every 30 days on one that takes 90. Slow-paying customers, not the headline rate, are what make factoring expensive.

Who uses invoice financing

It suits businesses that sell to other businesses (B2B) on payment terms: trades subcontracting to larger general contractors, staffing agencies covering payroll before clients pay, wholesalers, and freight carriers. If your cash crunch is caused by waiting on invoices rather than by a shortfall in profit, factoring fixes the actual problem more cleanly than a term loan, which just adds debt on top of receivables you already own. It's less suited to businesses that sell to consumers, take payment on delivery, or issue only a handful of small invoices a month — there, the setup overhead outweighs the benefit.

Factoring vs a line of credit or bank loan

A line of credit or term loan is borrowing against your business; factoring is selling an asset you already own — the receivable — so it doesn't add debt to your balance sheet and it grows automatically with your sales rather than being capped at a fixed limit. A bank line is usually cheaper if you can get one, but it's sized to your financials and can take weeks to arrange; factoring is easier to qualify for and faster, because approval hinges on your customers' credit. Many businesses use factoring precisely because they've maxed or been declined for a bank line, and need funding that keeps pace with growth.

What to check before you sign

Beyond the advance rate and fee, the terms that matter most are the contract length, any monthly minimum volume you must factor, notice periods to exit, and whether the agreement requires you to factor all invoices or lets you choose. Reserve holdbacks, monthly account fees, and wire charges add up and are easy to overlook next to the headline rate. A long lock-in with a high minimum can trap a business whose needs change; a flexible, spot-factoring arrangement costs a little more per invoice but leaves you in control. Compare the all-in cost and the exit terms, not just the advertised percentage.

How to qualify

Qualifying is mostly about your customers and your invoices, not your years in business or credit score. Factors want to see invoices to creditworthy commercial customers for completed, undisputed work, an accounts-receivable aging report, and confirmation that no other lender already holds a lien on those receivables. Clean paperwork speeds everything up: clear invoices, signed proof of delivery or completion, and customers who pay (even if slowly) are what a factor is buying. If you're financing a truck or machine rather than bridging receivables, that's asset financing — a different product that routes to IronFinance.

How factoring affects your customer relationships

Because the factor usually collects the invoice directly, your customers will typically know you factor — payment gets remitted to the factor rather than to you. For most B2B customers this is routine and unremarkable; large general contractors and established brokers deal with factored invoices constantly. Still, it's worth choosing a factor whose collections are professional and low-friction, because they now represent you to the customers who pay your bills. A heavy-handed collector can strain a relationship you rely on for repeat work. Ask a prospective factor how they handle collections, whether they'll work with your key accounts' payment quirks, and what a customer actually experiences. The best factoring arrangements are invisible to your customer beyond a change of remittance address.

What lenders look at

Invoices to creditworthy commercial (B2B) customers
Customers on 30–90 day payment terms
Clean, undisputed invoices for completed work
Accounts-receivable aging report
No existing lien on the receivables
Invoice volume that meets the factor's minimum

Frequently asked questions

How much of the invoice do I get up front?: Most factors advance 80–90% of the invoice within a day or two, then release the remainder — minus their fee — once your customer pays.
What does invoice factoring cost?: Usually a percentage of the invoice value per 30 days outstanding, plus possible reserve holdbacks or monthly minimums. The slower your customers pay, the more it costs.
Is factoring a loan?: No. You're selling an asset — the invoice — not borrowing against it, so it doesn't add debt to your balance sheet the way a loan does.

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See what you may qualify for

Crewline is a referral and matching service, not a lender. We do not make credit decisions or guarantee approval. Financing is provided by third-party lenders subject to their own terms and criteria.