Types of Invoice Financing

There are two main types of invoice financing, also known as factoring: invoice discounting and invoice factoring. Under both models, a lender purchases invoices from you that have yet to be paid by your customers. Factoring has historically been more common in Europe than in North America, where invoice discounting is more popular; however, businesses are increasingly opting for factoring because it’s easier and faster.

With invoice factoring, you agree with your invoice financier on an advance percentage (typically 85%), which he pays to you immediately. You then present those invoices to your clients for payment—and once they’re paid, you pay back your invoice financier through wire transfer or direct deposit into his bank account. This means no delays waiting for checks to clear.


If invoice factoring sounds like something you want to explore further, get in touch with us today at Finance Hub! We’d love to help you learn more about invoice finance, how it works, and whether or not it might benefit your business.

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