What are the different types of Invoice Financing?

Lendzero makes things easier. We have reduced the complexity to obtaining business funding, click, learn and then Compare Funding Options. You are not alone, our  advisors will advise you on the best options.
Compare Funding Options

What are the different types of Invoice Financing?

There are different types of invoice financing. One is invoice factoring, which will be discussed in the next section. You may also want to consider single (or selective) invoice financing. In this case, you will only choose to finance certain invoices and treat others as normal. For example, you may want to do this if you need to generate additional working capital for a short amount of time and just want quick access to money. You can send one or several larger invoices to the financing company, which is generally cheaper than having to finance all of your invoices with the associated fees and interest costs.

You should also know the difference between recourse and non-recourse financing. With recourse financing, your company must agree to take full responsibility for the payment of the invoice that you borrowed against. So, if your customer defaults and you can't get them to pay, you will need to reimburse the advanced amount to the lender. The lender may then retain the remaining value of the invoice until the customer pays before deducting the management fee and interest and transferring the rest to you.

With non-recourse financing, the invoice finance provider will have to “eat” the losses. Clearly, this is a lot riskier for the lender, and you can expect it to be much more expensive in terms of fees and interest rates. Also, the lender may impose strict limitations, so you must read the terms and conditions carefully before proceeding. This type of agreement is relatively rare due to the increased risk for the lender.

Getting started is easy

Easy sign up

Complete a brief business profile
and funding request form. One application,  multiple offers.
Let’s get started

eSign your application

Verify your application details, sign from your desktop computer or mobile device.
Let’s get started

No haggle offers

Finally a day when you get the best deal for business funding. No negotiations necessary.
Let’s get started
Speak to a human instead, call (888) 850-1021
Mon-Fri | 9am - 6pm EST

How we compare