If your customers take 30, 60 or 90 days to pay, factoring advances working capital against those invoices, so you don't wait on the payment cycle to operate.
An invoice factoring transaction has two inputs and one useful output: you have a delivered invoice that a creditworthy customer owes you, and Prime Advisor has cash. We advance most of the invoice value to you against the receivable, with recourse, and you keep responsibility for collecting from your customer. We track the payment and apply it when it arrives. That is the entire mechanism.
Factoring is structured as an advance against receivables, not as a term loan: there's no fixed monthly payment to schedule, no covenant to maintain, no balance to refinance. The invoice is the collateral. If your customer doesn't pay, the advance is yours to repay; the firm doesn't absorb that risk. You took the discount in exchange for the cash up front.
You submit a fresh invoice for $42,000 owed by a Fortune-500 retailer. We verify the invoice and approve it, and a substantial advance against the invoice hits your operating account. You make payroll without waiting on the customer's payment cycle.
When the retailer pays the $42,000 invoice, the advance is cleared. You receive the reserve we held back, less our fee. The cycle resets with the next invoice.
Factoring is the right tool when three things are true at once: your customers are creditworthy businesses (not individuals), payment terms are 30–90 days, and your gross margin can absorb a per-invoice service fee. If those three are true, factoring is usually cheaper than waiting, because the wait carries a cost that rarely shows up on the income statement.
It's the wrong tool when your margin is razor-thin, your customers pay in under 15 days, or you're trying to fund a one-time capital expense unrelated to a specific invoice.
A short application, your AR aging report, and a sample of recent invoices. We pull credit on your customer (the debtor), not on you, which is why factoring is open to operators that don't qualify for bank credit yet.
If you carry meaningful 30+ day commercial receivables month after month, the conversation is worth ten minutes. Pick up the phone, that's still the fastest way.
Two tools, two different jobs. The wrong choice won't sink the business, but it can cost months and a contract you could have taken.
Cash flow problems rarely show up labeled as cash flow problems. They show up as missed contracts, slow payroll runs, and decisions you wouldn't make if you weren't tired.
