How invoice financing works
A lender advances a percentage of your outstanding accounts receivable. When your customer pays, you receive the balance minus fees. With factoring, the lender collects from your customer directly.
How a working capital loan works
A working capital loan gives you a lump sum based on your revenue history, which you can use for any operating need — not just the gap on one invoice.
Which to choose
- Invoice financing: B2B businesses with large invoices and reliable customers
- Working capital loan: businesses needing flexible cash for multiple uses
- Line of credit: businesses with recurring but unpredictable gaps
Frequently asked questions
Will my customers know I'm using invoice financing?
With factoring, usually yes, because the lender collects payment. With confidential invoice financing or a working capital loan, customers are not involved.