You did the work. You sent the invoice. And now you wait — 30, 45, sometimes 60 days — while payroll, fuel, rent and suppliers refuse to wait with you. That gap between doing the work and getting paid for it is one of the most common reasons healthy businesses run short of cash. Invoice factoring exists to close that gap.
In plain English: invoice factoring is selling your unpaid B2B invoices to a factoring company for immediate cash. Instead of waiting weeks for your customer to pay, you get most of the money the same day and the factor collects from your customer on their normal terms. It's not a loan — you're not borrowing money, you're getting paid earlier for work you've already done.
Key takeaways
- Factoring means selling unpaid B2B invoices for immediate cash — it's your own money, earlier, not a loan.
- Xfund advances up to 90% of the invoice the same day; the rest is released when your customer pays, minus one fee.
- Fees are simple and flat — typically 1%–2.5% per 30 days the invoice is outstanding.
- Approval is based mainly on your customers' credit, so newer companies and owners with imperfect credit qualify.
How factoring works at Xfund
The process is deliberately simple, and once you're set up it runs in four steps:
- You submit an invoice. Do the work or deliver the goods as usual, then upload the invoice through our online portal.
- We advance up to 90% the same day. Approved invoices submitted before cut-off are funded the same business day, straight to your account.
- Your customer pays on their normal terms. Nothing changes for them — they pay the invoice in 30, 45 or 60 days like they always have, and our team handles the follow-up professionally.
- We release your reserve, minus one fee. The remaining 10% (the reserve) comes back to you as soon as your customer pays, less a single factoring fee — typically 1%–2.5% per 30 days the invoice was outstanding.
That's the whole model. No setup fees, no monthly minimums, and no obligation to factor every invoice — you choose which customers and invoices to fund.
A worked example: a $20,000 invoice
Say you invoice a customer $20,000 on 30-day terms and factor it with a 90% advance and a 2% fee per 30 days.
- Same day: you receive $18,000 (90% of $20,000) in your account.
- Day 30: your customer pays the $20,000 to Xfund as usual.
- Reserve release: the $2,000 reserve is released to you, minus the fee. At 2% of $20,000, that fee is $400 — so you receive a further $1,600.
All in, you collected $19,600 of your $20,000 invoice — and $18,000 of it was in your hands a month early, ready to cover payroll, take on the next job, or buy at volume discounts. Your exact rate is confirmed in your agreement before you fund anything.
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Factoring vs. a loan: what's the difference?
A loan puts debt on your balance sheet and is approved based on your credit history, financial statements and collateral — a process that can take weeks or months. Factoring is a sale, not a borrowing: approval rests mainly on the creditworthiness of your customers, funding arrives in hours rather than weeks, and there's no new debt to carry or repay. That's why factoring works for newer businesses, fast-growing companies, and owners whose personal credit isn't perfect. We break down the full comparison in factoring vs. bank loans.
Who is factoring for?
Factoring fits any business that invoices other businesses (or governments) on terms and can't afford to wait for payment. It's a staple in trucking and transportation, where carriers get paid on loads the day they deliver; in staffing, where agencies must run payroll every week regardless of when clients pay; and across manufacturing and wholesale and distribution, where cash tied up in receivables means cash not buying materials or inventory. See how it applies to your sector on our industries page.
Recourse vs. non-recourse, briefly
With recourse factoring, if your customer ultimately doesn't pay, you buy the invoice back or swap in another — in exchange, fees are lower. With non-recourse factoring, the factor absorbs the loss if your customer becomes insolvent, at a somewhat higher fee. Most businesses choose recourse because their customers are creditworthy (that's why the invoices were approved in the first place), but the right structure depends on your customer mix — and it's worth a five-minute conversation before you decide.
The bottom line
Invoice factoring turns your slowest-moving asset — receivables — into same-day working capital, without adding debt. If you're weighing the numbers, read what factoring actually costs or see our transparent pricing. And if you'd rather just talk it through, call us at (647) 716-5626.