Factoring or revenue-based financing?
Factoring rests on invoices owed by other businesses; revenue-based financing, on the deposits in the business account. In both cases the lender decides and sets its terms in its written offer.
Choose my amountThe answers
- What is the difference between factoring and revenue-based financing?
- With factoring, you assign to a lender an invoice owed by a business customer, and it pays you part of it before the customer pays. With revenue-based financing, the lender pays out a sum measured against your deposits, which the business repays out of its revenue.
- When does one or the other come up?
- Factoring supposes invoices on terms, owed by businesses or public bodies. Revenue-based financing suits businesses whose sales land directly in the account, by cash or by card.
- What does each one ask of the business?
- For factoring, the lender looks first at the strength of your customers and the quality of the invoices; for revenue-based financing, at the regularity of deposits, month by month. Your business bank statements count in both cases.
- Factoring or revenue-based financing: which one for my business?
- It depends on how your customers pay you: by invoices on terms between businesses, or by sales collected as they happen. We present the file to the lenders you authorize, and each one decides.
What the lender looks at
- Actual deposits, month by month
- In both cases, the lender compares what is invoiced or sold with what actually lands in the account.
- Trend over the period
- Deposits or an invoice book that rise, hold or fall are read over the whole period.
- Payments to other lenders
- An advance already taken on the invoices or on the revenue has to be declared.
- How long the business has been operating
- Time in business usually weighs less in factoring, where the quality of the customers comes first.
$0 upfront · 7% only if funded
An intermediary, not a lender.
The lender sets the final amount and its cost in its written offer.
Choose my amount