Invoice Factoring

Invoice factoring solves one of the most frustrating cash flow challenges businesses face: the gap between when you deliver products or services and when customers actually pay their invoices. For businesses working on net-30, net-60, or net-90 payment terms, this gap can be substantial. You've already incurred costs and completed work, but payment is weeks away. Invoice factoring bridges this gap by converting your unpaid invoices into immediate cash.

Here's how invoice factoring works: You deliver goods or services to a customer and issue an invoice. Instead of waiting 30-90 days for the customer to pay, you sell that invoice to Nautix Capital. We advance you approximately 70-90% of the invoice value immediately—typically within 24 hours. When your customer pays the invoice, we retain a factoring fee (typically 1.5-5% of the invoice amount depending on invoice size and customer creditworthiness) and send you the remaining balance. The process repeats for each new invoice, providing continuous working capital.

Invoice factoring is not a loan—it's the sale of an asset (your unpaid invoices). This distinction is important for several reasons. First, it doesn't count against your debt-to-income ratio the way a loan would, which is valuable if you're planning to pursue other financing. Second, you're not personally liable if a customer fails to pay (in non-recourse factoring). Third, there's no fixed monthly payment—your repayment obligation scales directly with your business activity. If you factor $100,000 in invoices, you'll advance a percentage of that amount and the obligation is fulfilled once customers pay.

Industries that benefit tremendously from invoice factoring include staffing and recruiting agencies (where client payment terms are often net-30 to net-90), logistics and transportation companies, commercial contractors and construction firms, wholesale distributors, and B2B service providers. These businesses typically have large invoices, extended payment terms, and healthy margins—perfect for factoring. A staffing agency might factor invoices worth $200,000 monthly, receive $160,000 in advance, and have $180,000 within 30 days when clients pay, netting $20,000 for working capital even after the factoring fee.

One misconception about invoice factoring is that it's expensive. While the fees are higher than traditional loan interest (3-5% per month vs 0.5% per month for loans), you're only paying fees on the exact amount factored and only for the duration until the customer pays. If you factor $100,000 that gets paid in 30 days, you're paying roughly the same as if you took out a short-term loan. Additionally, many factors provide additional services like accounts receivable management, credit checking of customers, and dispute resolution—services that have their own value.

Invoice Factoring rates currently range from 1.5% to 5% depending on your specific real-time credit tier, monthly revenue, and time in business. Use our interactive payment estimator below to calculate your exact estimated rate and monthly payment based on your business profile.