The short answer
At a glance
| What it is | Cash advanced against unpaid business or government invoices |
|---|---|
| Typical amounts | Based on invoice values; MFE reviews $5,000 to $5,000,000 |
| Invoice terms | Usually net 30 to 90 |
| Customers | Businesses or government agencies, not consumers |
| Credit | Your customer's payment record matters a lot; scores from 500 considered |
| Cost structure | A fee based on invoice value and how long the invoice stays unpaid |
| Documents | Invoices, customer list, aging report, bank statements, ID |
| Best for | B2B and government contractors waiting on slow payers |
| Avoid if | You sell to consumers who pay at the register |
Before you apply: checklist
- List open invoices with customer name, amount and due date
- Confirm each invoice is for work completed and not disputed
- Pull an accounts receivable aging report
- Check whether any invoices are already pledged to another lender
- Ask how the fee is calculated and when it increases
- Ask whether the factor or you collect from the customer
- Ask what happens if a customer never pays
- Have bank statements and ID ready
Check what your business qualifies for
Merchant Fund Express reviews invoice factoring and purchase-order funding requests from $5,000 to $5,000,000. Scores from 500 are considered, and same-day decisions are common on complete files.
Check funding options with Merchant Fund ExpressFactoring vs accounts receivable financing
Factoring usually means selling invoices. The factor advances a share of the invoice, often collects directly from your customer, then sends the remainder minus its fee once the customer pays.
Accounts receivable financing usually means borrowing against your receivables as a group. You keep collecting from customers and repay as they pay. Terms vary, so ask which structure an offer uses. Ask too whether the arrangement is recourse (you buy back unpaid invoices) or non-recourse (the factor carries some credit risk). Our invoice factoring guide goes deeper.
Construction factoring and progress billing
Construction is harder to factor than most industries. Progress billing, retainage and lien rights mean an invoice may not be paid in full even after work is done. Factors look for signed contracts, approved pay applications and a clear record of the general contractor or owner paying on time. Subcontractors paid by commercial general contractors are the usual fit. Note that many funders restrict residential remodeling and new residential construction. See the construction and contractor cheat sheet for more.
Purchase-order and inventory funding
Purchase-order funding helps when you have a confirmed order from a business customer but not the cash to pay your supplier. The funder pays the supplier, the goods ship, you invoice the customer, and the invoice is often factored to close out the deal.
Inventory funding helps distributors and ecommerce sellers stock up before a busy season. Because ecommerce customers are usually consumers paying at checkout, factoring rarely fits them; an advance or revenue-based option may fit better, so compare invoice factoring vs MCA.
Funding brings customers. Is your website ready for them?
Funding usually pays for growth: more stock, staff, equipment or marketing. Make sure the customers that growth brings find a website that explains what you do and makes it easy to call, book or buy. Cheap Cheap Websites builds professional sites from $399, with Website Care at $30/month.
Illustrative example: one $100,000 invoice
| Item | Amount |
|---|---|
| Invoice to a commercial customer, net 60 | $100,000 |
| Advance at 85% | $85,000 |
| Reserve held back ($100,000 minus $85,000) | $15,000 |
| Assumed fee: 3% per 30 days, paid on day 60 (2 x 3% x $100,000) | $6,000 |
| Rebate after customer pays ($15,000 minus $6,000) | $9,000 |
| Total received ($85,000 + $9,000) | $94,000 |
Assumptions: an 85% advance, a fee of 3% per 30 days outstanding, the customer pays on day 60, no other fees. If the customer paid on day 30, the fee would be $3,000 and the rebate $12,000.
These figures are illustrations, not offers. Real pricing and terms depend on your file.
Common mistakes:
- Factoring invoices that are disputed or for work not yet finished.
- Ignoring how the fee grows the longer a customer takes to pay.
- Pledging the same invoices to two funders.
- Not telling your team how customer payments will be redirected.
How Merchant Fund Express handles this
Merchant Fund Express reviews factoring for businesses that invoice business or government customers with real, undisputed invoices, usually net 30 to 90. It is not a fit for businesses paid at the point of sale by consumers. See the MFE invoice factoring page, gather your aging report, and apply with Merchant Fund Express. English and Spanish service is available.
Related
Cheap Cheap Websites builds websites. It does not lend or make funding decisions. Funding is offered by our funding partner, Merchant Fund Express, and every request is subject to its review and approval. Figures on this page are illustrations, not offers. Updated October 16, 2026.