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What Is a Factoring Company?
A factoring company is a specialist finance provider that buys outstanding invoices from businesses and advances them cash immediately. Once the factoring company purchases the invoices, it takes responsibility for collecting payment from the business's customers.
Factoring companies are also called invoice factoring providers, debtor finance companies, or receivables finance firms.
How a Factoring Company Helps Your Business
Factoring companies solve the cash flow timing problem that affects many small businesses. When you deliver goods or services, you often have to wait 30, 60, or 90 days for payment. A factoring company gives you access to that cash immediately, so you can:
- Meet payroll and supplier obligations without waiting
- Take on new contracts and growth opportunities
- Manage seasonal cash flow fluctuations
- Avoid expensive overdrafts or short-term loans
What Does a Factoring Company Do?
- Purchases your invoices at a small discount (the factoring fee)
- Advances you most of the invoice value — typically 70–90% — immediately
- Manages collections from your customers on your behalf
- Releases the remaining balance once the customer pays, minus their fee
What to Look for When Choosing a Factoring Company
- Transparency: All fees should be clearly explained upfront
- Speed: How quickly do they fund after you submit invoices?
- Flexibility: Can you select individual invoices or must you assign the whole ledger?
- Confidentiality: Do they notify your customers or operate discreetly?
- Contract terms: Are there lock-in periods, exit fees, or minimum volumes?
Fundtap — A Modern Alternative to Traditional Factoring Companies
Fundtap is not a traditional factoring company. It is an on-demand invoice finance platform that gives you all the benefits — immediate cash from unpaid invoices — without the drawbacks. No customer notification, no whole-ledger requirements, no lock-in contracts. Funded within hours.
A factoring company is a finance provider that buys outstanding invoices from businesses and provides an immediate cash advance. The factoring company then collects payment from the business's customers.
Factoring companies charge a factoring fee — typically 1–5% of the invoice value per month — plus potential admin and service fees. They earn the difference between the cash advanced and the amount collected from customers.
No. Factoring companies are specialist finance providers, not banks. They purchase invoices rather than providing loans, so the financing does not appear as debt on your balance sheet.
Factoring companies serve many industries but are particularly common in construction, manufacturing, logistics, recruitment, wholesale, and professional services — where long payment terms are typical.
Yes. Fundtap is a modern alternative that provides on-demand invoice finance without the whole-ledger requirements, customer notifications, or lock-in contracts typical of traditional factoring companies.