Last Updated December 23, 2024
Once you’ve determined invoice factoring is the optimal funding solution for your company, the next step is to find a top-rated factoring company. But with so many factoring companies out there, how do you choose the best one?
When searching for a funding provider, it’s important to target companies with a good reputation. To help narrow down your search, below are five factoring companies that have been widely recognized as some of the best in the industry. No matter if you run a startup, small business, growing business, or seasonal business, these lenders can work with you hand-in-hand to ensure you’re optimizing your cash flow.
With that said, let’s discuss what makes a good factoring company, what to look for in a partner during your search, and the best invoice factoring companies in the industry.
What to Look for in a Good Factoring Company
In your hunt for the top factoring companies, you should prioritize the following:
- Good-to-exceptional customer service
- Top-rated companies on Trustpilot or other trusted review sites
- Transparent contracts and policies (no hidden rates or fees)
- Experience partnering with businesses in your industry
- Efficient funding process
- The backing of a bank
Bank-backed factoring companies are typically going to be the best factoring companies to work with because they are heavily regulated, FDIC-insured, and a reliable source of funds.
Expect the best-rated factoring companies to put customer service at the forefront. This should be reflected in their reviews on business review sites such as Trustpilot.
Further, the best factoring companies understand the importance of transparency. There should be no evidence of hidden rates, fees, or unclear language in contracts meant to confuse you.
Finally, most top-rated factoring companies have built their reputations through years of experience successfully helping business owners improve their cash flow and reach their growth goals. Therefore, look for funding partners that have evidence of assisting business owners like you.
Best Invoice Factoring Companies
We recommend the following top-rated factoring companies to begin your search:
- altLINE: Best Overall for Small Businesses
- eCapital: Best Factoring Company for Large Invoices
- FundThrough: Best Factoring Company for Accounting Software Integration
- Riviera Finance: Best Factoring Company for Non-Recourse Factoring
- Scale Funding: Best Factoring Company for Month-to-Month Contracts
| Factoring Company | Funding Limit | Trustpilot Rating | Known For | Best For |
|---|---|---|---|---|
altLINE | $5,000,000 | 4.8 | Exceptional customer service and transparency | Startups, high-growth companies, small businesses, staffing companies, and trucking companies |
| eCapital | $30,000,000 | 3.5 | Fast funding | Established businesses with large invoices (Up to $30 million) |
| FundThrough | N/A | 2.6 | Unlimited funding limits | Businesses looking to integrate their accounting software with their factoring service provider |
| Riviera Finance | $2,000,000 | 3.8 | Offering non-recourse factoring | Businesses looking for in-person factoring (more than 25 office locations in North America) |
| Scale Funding | $30,000,000 | N/A (no profile listed) | Flexible month-to-month contracts | Seasonal businesses with regular changes to funding needs |
altLINE: Best Overall for Small Businesses
Unlike most factoring companies, altLINE has a bank affiliation, as it’s the invoice factoring branch of The Southern Bank Company. Because of this, altLINE has gained a reputation as one of the most trusted factoring companies with exceptional customer service.
altLINE services almost any industry, including staffing, trucking, manufacturing, wholesale, and oil and gas. Depending on the industry, rates can be as low as 0.80%. Dedicated account managers work to ensure secure transactions between the debtor, their clients, and altLINE.
Funds can be accessed quickly with altLINE, as the factoring provider offers same-day funding.
Pros:
- Exceptional customer service
- Bank affiliation, which adds a layer of security and transparency
- No hidden rates or fees
- Flexible contracts
- Supports back office tasks, such invoice processing and payment collection
Cons:
- Not the lowest rates
- Can’t accept large invoices
eCapital: Best for Companies with Large Invoices
eCapital purchases invoices up to $30 million, making it one of the best factoring companies for more established, medium-sized businesses with large invoices. They also offer non-recourse factoring.
Funding times are generally fast; however, if debtors take long to pay, fees can add up quickly. Further, eCapital does not have a bank affiliation.
eCapital doesn’t just specialize in invoice factoring. They also offer other forms of asset-based lending and equipment refinancing.
Pros:
- Fast funding
- Can accept invoices up to $30 million
- Easy qualification requirements
- Also provides asset-based lending
Cons:
- No bank affiliation
- Fees can add up
- Mixed reviews on Trustpilot
FundThrough: Best for Accounting Software Integration
FundThrough covers up to 100% of the invoice value immediately, and funding times are notoriously fast. However, it might not be the best factoring company for startups and small business owners because they require a $100,000 monthly minimum in outstanding invoices to qualify.
Notably, FundThrough’s platform is built with the assistance of artificial intelligence. It’s known for allowing its clients to easily integrate their accounting platforms (such as QuickBooks, Cortex, and OpenInvoice) with FundThrough’s platform.
Pros:
- Fast funding
- Maximum cash advances
- Accounting software integration capabilities
Cons:
- $100,000 monthly minimum
- No bank affiliation
Riviera Finance: Best for Non-Recourse Factoring
Riviera Finance has more than 25 offices across the U.S. and Canada, meaning if you’re in search of a factoring company that you can visit in-person, they’re a great option.
Unlike many factoring companies, Riviera Finance also offers non-recourse factoring. It’s important to note that while non-recourse factoring does put the responsibility on the factor to cover debtor non-payment, this type of factoring typically has much higher fees due to the risk the lender assumes.
Pros:
- Non-payment protection (at a cost)
- Can factor in-person
- Ease of application
- Broad eligibility serving a wide range of industries
Cons:
- No banking affiliation
- Factoring fees not explicitly listed
- Non-payment protection can lead to higher rates
Scale Funding: Best for Month-to-Month Contracts
Scale Funding is known for offering good customer service and its flexible, month-to-month contracts. Seasonal businesses or any company that has constantly fluctuating sales should see Scale Funding as one of the best factoring companies.
There is a $50,000 monthly minimum with Scale Funding, so it may not be the best factoring company for startups.
Pros:
- Customer service
- Month-to-month contracts, ideal for seasonal businesses
- High funding limits
- Advertises same-day funding
Cons:
- $50,000 monthly minimum can be too high for startups
- Factor rates not disclosed
Important Factors to Consider When Searching for the Best Factoring Company
Below are some considerations to take into account before deciding on your funding partner.
Recourse vs. Non-Recourse
There are two types of factoring: recourse and non-recourse.
Simply put, recourse factoring means your business is liable for debtor non-payment. Non-recourse means the factoring company is liable.
While this may make it seem like non-recourse is the best option, there’s more to consider. Typically, factoring companies that assume responsibility for missing customer payments will implement additional fees to make up for the risk they’re taking on. Furthermore, factoring companies that only offer recourse factoring like altLINE will provide some protection for your company via thorough debtor background and credit checks. This drastically reduces your chances of taking on risky customers.
Debtor Credit Analysis
The best accounts receivable factoring companies should look out for your business and serve your best interests. But how do they do this?
One example is by analyzing the credit profiles of your existing and potential new debtors. Many factoring companies, like altLINE, will do this at no cost. This process adds a layer of security for your business, as it prevents you from working with customers who are at risk of not paying for the services or goods you’ve provided. Confirm with your factoring company before signing the dotted line that they perform thorough background checks on new debtors.
Funding Times
Many business owners choose to factor their invoices because of imminent working capital needs, as it’s one of the quickest ways to access capital.
Good factoring companies will release funds on factored invoices within 24-48 hours of submission, and many offer same-day funding. Exact speeds vary from company to company, but it’s important to consider the reasons behind slight differences in funding times from company to company.
For instance, providers might take a few extra hours or an extra day to send cash because they’re diligently verifying invoices. If a factoring company advertises that they will fund 100% of your invoices within minutes, you should confirm with them that they’re doing their due diligence to protect your business from fraud by carefully verifying invoices.
Fees and Rates
There are generally two types of fee structures with factoring: flat fees and tiered rates. You’ll also have your routine administration fees, account setup fees, and early termination fees if you breach your contract early.
Just as with other financing solutions, factoring can involve hidden rates and fees if you aren’t careful in your search for the best factoring company. Therefore, your search shouldn’t start and end with whichever company has the lowest fees.
Instead, it’s best to evaluate company transparency. One provider might have slightly higher rates than the next, but this could solely be because the company with higher fees provides a more clear explanation behind their factoring rates and fees. The latter might be excluding circumstantial fees or keeping them in the fine print.
Contract Lengths
Factoring contracts will vary. The industry standard is a one-year contract. Some lenders provide month-to-month contracts that can be particularly useful for seasonal businesses, though it’s necessary to explore what the additional fees will cost you if you choose to work with a factoring company with short or highly flexible contracts. Be wary of companies that try to lock you into long-term contracts, such as two-year deals.
Looking for More Information on Factoring?
altLINE specializes in partnering with startups and small business owners who need funds fast from a reliable provider. There is no minimum credit score requirement to apply.
If you have any questions about the factoring process, feel free to call us and speak to a representative at +1 (205) 607-0811 or fill out our factoring quote form to get your free quote.
Michael McCareins is the Content Marketing Associate at altLINE, where he is dedicated to creating and managing optimal content for readers. Following a brief career in media relations, Michael has discovered a passion for content marketing through developing unique, informative content to help audiences better understand ideas and topics such as invoice factoring and A/R financing.
