Factoring Reserve

The factoring reserve is the money that is withheld from the cash advance sent by a factoring company to a business during the invoice factoring process.

For example, for each invoice a business sells to the factor, typically 80-90% of the value of the invoice is immediately advanced to the business. The remaining 10-20% is held in reserve until the customer has paid the outstanding invoice. This remaining value is known as the factoring reserve.

Once the business’s customer has paid the invoice, a factoring company like altLINE releases the factoring reserve and the remaining cash is unlocked.