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What is the difference between invoice financing and invoice factoring?

Updated this week

Invoice Financing:

  • You borrow money using your unpaid invoices as security.

  • You still chase your customers for payment.

  • Think of it like a loan.

Invoice Factoring:

  • You sell your unpaid invoices to another company.

  • They chase your customers for payment.

  • Think of it like selling an asset to get quick cash.

The main difference is who handles collecting the money from your customers.

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