Invoice financing covers two different structures, and which one you are offered depends on who you ask. A bank lends against your receivables: the invoices are collateral on an operating line, you keep collecting from your customers, and the amount available follows a borrowing base, commonly 75% of eligible invoices under 90 days old, with foreign, related-party and overdue invoices often left out. A factoring company buys the invoices themselves: it advances most of each invoice when you bill, your customer pays the factor under a notice of assignment, and the rest is released, less the fee, when the customer pays.

Each provider tests something different. The bank qualifies the business: two or more years of financial statements, profitability, the owners' credit, a general security agreement and a personal guarantee, with the line reviewed every year. The factor qualifies your customers: whether the businesses or governments you invoice pay reliably, whether the work is complete and undisputed, and whether anyone else already holds security on the receivables. An existing bank registration has to be subordinated before a factor can take the invoices. That is why a young agency or carrier billing established clients can be declined by the bank and approved by a factor.

Specialist factors exist because some invoices behave differently. Freight factors work from the bill of lading and proof of delivery, and some add fuel-card programs. Staffing factors fund weekly to match payroll. Construction invoices with holdbacks and progress billing are harder to factor and go to providers that specialise in them. For export receivables, Export Development Canada does not buy invoices itself, but its accounts receivable insurance lets lenders advance more against foreign invoices: EDC says lenders typically advance up to 90% against insured invoices.

When comparing providers, the advance and the fee are only part of the price. Ask whether the fee runs per invoice or per 30 days outstanding, whether the facility is recourse (you buy back invoices the customer never pays) or non-recourse, whether there is a monthly minimum or a fixed term with a termination fee, and whether you must factor every invoice or can choose. Minimums and exit fees are the clauses most worth reading before signing. Voxen places factoring files with the provider that fits the customer list, with no application fee and no credit impact to ask.

Baseline eligibility, by product

Figures are typical ranges for a complete file, not guarantees. Final terms depend on revenue, time in business, credit profile and lender review.

Related

• Invoice Factoring
• How to qualify — factoring
• Bank loan vs factoring
• Apply now
• Eligibility by product
• Do I qualify?

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