Compare Factoring / Financing Software

Factoring / Financing buying guidance

At a glance: Factoring and financing are related but distinct ways a logistics business may address working-capital timing. Factoring generally involves a factor purchasing receivables, with or without recourse, while receivables-backed lending uses receivables as collateral; the legal and economic result depends on the agreement and transaction. The OCC describes accounts-receivable financing as collateral-based commercial lending, and IRS audit guidance describes factoring services and recourse distinctions. A label does not prove sale treatment, cost, funding speed, or who ultimately bears a loss. Factoring of Receivables Audit Technique Guide; Accounts Receivable and Inventory Financing

Common workflows

• Receivables eligibility and debtor workflow: Trace an invoice from creation, submission, verification, approval, advance, debtor notice, collection, reserve release, and any dispute or chargeback. Ask which debtors and invoice types are eligible and what happens to deductions, offsets, credits, or slow payment. Factoring of Receivables Audit Technique Guide
• Compare full contract economics: Compare a same-invoice settlement example across the amount funded, timing, reserves, every fee, minimums, recourse events, lien/security terms, exclusivity, and termination costs. Distinguish an outright purchase of receivables from a secured borrowing; obtain legal/accounting advice on treatment. Factoring of Receivables Audit Technique Guide; Accounts Receivable and Inventory Financing
• Compare with alternative capital: Model the cash need and repayment/collection against the business's actual receipts, customer concentration, collateral, and forecast. SBA programs are among the available small-business financing channels, but eligibility and terms are lender- and program-specific; do not infer an approval or rate from a general category description. Accounts Receivable and Inventory Financing; Loans

Questions to ask providers

• Is the proposed transaction a receivables purchase, secured loan, or another structure, and which contract clauses establish that?
• Which nonpayment, insolvency, dispute, credit memo, setoff, short-pay, or documentation events create recourse or repurchase duties?
• What amount is funded at each stage, which reserves are held, and exactly when and how are they released?
• What are all fees, minimums, term commitments, exclusivity, lien releases, personal guarantees, and early-exit costs?
• How are invoice eligibility, debtor credit limits, customer concentration, notice of assignment, and changed payment instructions handled?
• Can the provider show a sample statement and explain collection, dispute escalation, data security, and reconciliation responsibilities?

Frequently asked questions