Invoice Factoring Requirements: Does Your Business Qualify for Factoring Services?

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You have big plans for your business. To reach your goals, though, you need cash. You need it to pay employees, buy materials, fund marketing campaigns, and more. The problem is that your customers only sometimes pay on your preferred schedule. You may regularly have receivables that don’t get paid for 30, 60, or even 90 days. And every day your invoices don’t get paid, your goals slip further away.

What do you do to resolve your cash needs? You could apply for a bank loan, but it can be challenging to meet the underwriting requirements. Also, banks can take months to approve loan applications. Your cash flow need may have resolved itself by the time it’s approved.

Invoice Factoring: A Simple, Accessible Way to Improve Cash Flow

Invoice factoring is basically when a business sells its outstanding invoices to another company that specializes in purchasing those invoices. Typically, the business receives 75% to 90% of the invoice value upfront. The remaining balance, minus a small fee, is paid out once the invoice is collected.

This helps businesses get money quickly that would otherwise be tied up in customer payments, so they can keep their operations running smoothly or even expand.

The best part of factoring is that the service isn’t based on your credit. Instead, approval is based on the creditworthiness of your customers. Factoring financing may still be a viable option even if you have a rough credit history.

What financial and operational criteria must a business and its invoices meet to qualify for invoice factoring?

To be eligible for invoice factoring, your business should mainly sell to other businesses (B2B). You also need to have at least $25,000 in monthly sales and sell to customers with good credit who usually take a month or more to pay. Both your business and your customers must be set up in the United States.

Here’s a summary:

Your company sells to businesses
You have creditworthy customers
Your sales are $25,000 or more per month
You have limited or no access to bank financing
Your company and your customers are incorporated in the US
You give customers 30 or more days to pay

Does your company sell products or services to other businesses on terms?

Factoring is almost always available only for B2B invoices. If you sell to consumers, there are better options than factoring. Also, your invoices need to have specific terms. Remember, the factor will be collecting on your invoice, so they must know when the receivable is due.

What are the requirements related to the customers whose invoices are being factored?

For invoice factoring, it’s important that the customers you’re invoicing are creditworthy businesses. The factoring company cares more about the customer’s ability to pay than your business’s credit history. After all, it’s your customer who will ultimately pay the invoice. Do your customers seem like businesses with solid credit, good references, and reputable relationships with their vendors? If so, you may be a good candidate for factoring.

Are your sales at least $25,000 per month?

Most factoring companies have a minimum monthly sales requirement for factoring approval. If your monthly sales are less than $25,000, you may find it challenging to get approved.

Has your business ever been denied or experienced limited bank financing?

Many business owners look to bank financing before they turn to a factoring solution. The good news is that even if you’ve been denied bank financing in the past, you can still get approved for factoring funding. Again, factors are more interested in your customers’ credit, not rather than credit history.

Is your company incorporated and operating in the United States?

Most factoring providers in the United States only work with incorporated domestic companies. You must meet these criteria to qualify for factoring solutions.

Do your customers take more than 30 days to pay?

Factoring financing is an appealing solution if customers take more than 30 days to pay their invoices. Many businesses need the working capital on-hand to deal with a 30, 60, or even 90-day wait for invoices to get paid.

What specific documents and applications are required to initiate the invoice factoring process?

To initiate the invoice factoring process at Gateway Commercial Finance, we require the following documentation to evaluate whether your company qualifies for a funding facility:

Accounts Receivable Summary – A current list of outstanding invoices by invoice date
Accounts Payable Summary – Up-to-date details of your payables
Bank Statements – The most recent 90 days of statements
Sample Invoice or Billing Form(s) – A representative example of your billing format

Before submitting a full application, we recommend speaking with our Managing Director for a brief pre-qualification call. This will help determine if our services are a good fit, saving you time if your company does not meet our requirements. You can reach him directly at 1-855-424-2955 or by submitting a factoring quote request form.

If pre-qualified, you’ll be granted access to our online application, which allows you to securely upload the required documents and fill out a few additional fields. The entire process takes approximately 10 minutes to complete.

Author: Marc J Marin

Marc Marin is a seasoned expert in business financing, author, speaker, and educator with over 20 years of experience helping companies access working capital through factoring and funding solutions. He is known for making complex financial topics clear and actionable for business owners and finance professionals.

Last Update: July 9th, 2025