Update: This page was updated to include new data on small businesses and their need for factoring services.
As strange as it may sound, it's common for a small business to be cash-poor, even if the company is doing well. This is particularly true for startups, whose owners often find themselves staring at a stack of unpaid invoices from clients. Although money is coming, waiting for that influx of cash can put a halt to business, especially when other expenses are due sooner rather than later.
One way to climb out of this hole is to factor your invoices. Factoring is helpful because it puts money in your pocket so you can maintain steady cash flow and avoid problems from the people you owe money to. However, factoring isn't for everyone; some businesses are better off with a traditional loan. If you're seeking alternative financing options, check out our recommendations for business loan and financing options.
However, if you are considering factoring, we've examined a number of options and selected the services we think are best for various types of businesses. You can learn more about factoring services and our best picks below.
February 2020: A recent Payments Journal study reported that 46% of small businesses say they consistently receive late payments from clients and customers, with more than half of small business owners saying that late payments are negatively affecting cash flow. This data highlights the unique position factoring services are in, providing fast cash to small business owners to close funding gaps caused by late payments.