Invoice Factoring Broker: Complete Guide to Factoring, Costs & Best Companies (2026)

Last Updated: February 2026

An invoice factoring broker connects businesses that need immediate cash flow with factoring companies that buy their unpaid invoices. If you sell on net-30 or net-60 terms and wait weeks to get paid, a factoring broker can help you access working capital without taking on traditional debt. This guide explains what factoring brokers do, how much invoice factoring costs, how to choose the best invoice factoring broker for your business, and how freight brokers and other industries use factoring.

What Does a Factoring Broker Do?

A factoring broker (also called an invoice broker or factoring brokerage) acts as an intermediary between your business and invoice factoring companies. Instead of you shopping dozens of factors yourself, a broker:

• Shops your invoices to multiple factoring companies to get you the best advance rate and lowest fees
• Matches you with factors that fit your industry, volume, and customer base (e.g. freight, staffing, construction, B2B services)
• Handles paperwork and onboarding so you get funded faster
• Explains the process—invoice factoring meaning, contract terms, and how to account for invoice factoring in your books

Brokers are typically paid by the factoring company (a referral or commission), so many offer free invoice factoring broker services to the business. You get access to a factoring marketplace without paying the broker directly. When comparing invoice factoring broker reviews, look for brokers who work with multiple factors (like Factor Finders or established factoring companies with broker programs) so you get real options, not a single product.

Invoice Factoring Meaning: How It Works

Invoice factoring (receivables financing) means selling your unpaid invoices to a factor (a factoring company) in exchange for immediate cash. You receive an advance—typically 80–90% of the invoice value—within 24–48 hours. When your customer pays the invoice (usually 30–90 days later), the factor keeps a small fee and remits the remainder to you (the reserve). The factor assumes the credit risk on your customer in non-recourse factoring; in recourse factoring, you may have to buy back unpaid invoices.

Single invoice factoring (also called spot factoring or spot factor) lets you factor one invoice at a time instead of committing your whole receivables ledger. That’s useful for occasional cash crunches or testing the product. Full-service factoring typically involves a contract and ongoing submission of invoices. An invoice factoring agency or factoring brokerage can help you decide which structure fits and find invoice factoring companies near me or nationwide factors that serve your industry.

How Much Does It Cost to Factor an Invoice?

Factoring fees are usually quoted as a percentage of the invoice value per month (e.g. 1–3% per 30 days), plus sometimes a small fee per invoice or a monthly minimum. Total cost depends on:

• Time to payment: The longer your customer takes to pay, the more discount fees accrue
• Volume: Higher monthly volume often gets better rates
• Customer credit: Invoices from creditworthy customers (e.g. Fortune 500, government) typically get lower fees
• Recourse vs. non-recourse: Non-recourse (factor bears customer default risk) usually costs more

Example: On a $10,000 invoice at 2% per 30 days, if the customer pays in 45 days, you might pay roughly $300 in fees and receive $9,700 upfront (97% advance) plus the remaining reserve after the fee. A best invoice factoring broker will get you quotes from several factoring companies so you can compare. Avoid brokers who push one factor without transparency—reviews and referrals matter.

What Is the Best Invoice Factoring Company?

The "best" invoice factoring company depends on your industry, volume, and whether you need recourse or non-recourse. Top considerations:

• Industry focus: Freight, staffing, construction, and healthcare each have specialists (e.g. freight factoring, medical factoring)
• Advance rate and fees: Compare advance % and effective cost; the lowest fee isn’t always best if the factor is slow or inflexible
• Contract terms: Look at minimum volume, contract length, and notice to cancel—some invoice factoring contract terms lock you in for 6–12 months
• Customer service and funding speed: Same-day or next-day funding is common; avoid factors with slow onboarding or poor communication

Using an invoice factoring broker gives you access to a factoring marketplace so you don’t have to be an expert on every factor. Brokers like those in the Factor Finders network, or an invoice factoring agency that works with multiple factoring companies, can narrow the field to 2–3 options that fit your profile. Then you choose based on rate, terms, and fit.

Can a Freight Broker Use a Factoring Company?

Yes. Invoice factoring for freight brokers is one of the most common uses of factoring. Freight brokers invoice carriers or shippers on net-30 or similar terms but often need to pay carriers sooner. Factoring lets them get 80–90% of the invoice amount upfront so they can cover carrier payments and run more loads. Many factors specialize in transportation and freight; they understand load boards, rate confirmations, and the timing of freight payments. If you’re a freight broker, look for a factor (or a broker who places with factors) that offers freight-specific terms and fast funding so you can scale without cash flow gaps.

Single Invoice Factoring vs. Full Factoring

Single invoice factoring (spot factor) is ideal when you only need to factor occasionally or want to try factoring without a long-term contract. You submit one invoice, get an advance, and pay a fee on that invoice only. Spot factor programs are offered by many factoring companies and are often slightly more expensive per invoice than full-program rates. Full factoring involves a master agreement: you submit batches of invoices regularly and typically get better rates and dedicated support. An invoice factoring broker can help you decide whether spot factoring or a full program is right for you and find factoring companies that offer both.

Factoring Marketplace and Factor Finders

A factoring marketplace is a platform or network where businesses can compare multiple factoring companies or get matched with factors through one application. Factor Finders and similar services act as a broker or aggregator: you fill out one form, and they shop your profile to their panel of factors, then present options. That’s similar to what a strong invoice factoring broker does—saving you time and often improving terms by creating competition. When reading invoice factoring broker reviews, check whether the broker or marketplace actually has multiple factoring companies and whether they’re transparent about how they’re compensated.

How to Account for Invoice Factoring

How to account for invoice factoring in your books depends on whether the arrangement is treated as a sale of receivables (true sale) or a secured loan. In a true sale, you remove the receivable from your balance sheet and record the cash received and any loss or fee. In a secured loan treatment, the receivable stays on the books and you record a liability for the advance. Your accountant or CFO should align the treatment with the legal structure of your agreement; many factors use a sale structure. An invoice factoring agency or factor’s onboarding team can provide standard disclosure language, but your accountant should confirm.

Invoice Factoring Contract and Red Flags

Before signing an invoice factoring contract, review: (1) advance rate and fee structure, (2) recourse vs. non-recourse, (3) contract length and notice to cancel, (4) minimum volume or minimum fee, (5) which invoices are eligible (e.g. no concentration limits, no exclusions for certain customers). Red flags include long auto-renewals, large termination fees, or vague fee language. A good invoice factoring broker will help you compare contracts and avoid factors with predatory terms. If you’re searching for invoice factoring companies near me, note that many factors operate nationally and fund remotely—"near me" often means "serves my industry" rather than a physical office nearby.

How to Start an Invoice Factoring Company (For Brokers)

If you’re asking how to start an invoice factoring company, you’re likely considering becoming a factor (lender) or a factoring broker. Starting a factoring company requires significant capital (you’re advancing against receivables) and underwriting capability. Starting a factoring brokerage is lower capital: you refer clients to factors and earn referral or commission income. You need industry knowledge, a network of factoring companies, and compliance awareness (depending on state). Many invoice factoring broker businesses focus on one vertical (e.g. freight, staffing) and build relationships with 5–10 factors that serve that space.

Getting Matched With the Right Factoring Option

Whether you need working capital via invoice factoring, a line of credit, or another product, getting matched with the right lender or invoice factoring broker saves time and improves terms. Commercial Lending Broker is a free matching service: we connect businesses with lenders and brokers who specialize in their financing type. If you need invoice factoring or other working capital, you can get matched with specialized lenders who offer factoring, lines of credit, and related products. For more on working capital options, see our working capital loans guide and fast working capital financing.

Summary

An invoice factoring broker connects you with factoring companies so you get competitive advance rates and fees without shopping every factor yourself. Invoice factoring meaning: you sell unpaid invoices for immediate cash (typically 80–90% upfront). Cost varies by time to payment, volume, and customer credit; a best invoice factoring broker or factoring marketplace (e.g. Factor Finders) can get you multiple quotes. Freight brokers commonly use factoring to fund carrier payments. Single invoice factoring (spot factor) works for occasional needs; full programs suit regular users. Always review the invoice factoring contract and, if needed, work with an invoice factoring agency or broker to find invoice factoring companies that fit your industry and size.