How Does Invoice Factoring Work?

While the process of factoring invoices might vary from one factoring company to another, the basic process of factoring invoices with DB Squared works like this.

How Does Invoice Factoring Work at DB Squared?

Your business sells products or services to another business or organization. For each order fulfilled, an accounts receivable invoice is generated.

Rather than managing the invoice yourself, and waiting weeks or even months for your customer to make payment, you decide to use receivables financing to get immediate access to working capital.

You receive *immediate access to up to 98% of the full amount of each invoice you sell us – money that could otherwise be tied up for weeks or even months as a receivable. The remainder is placed in reserve, pending payment of the invoice by your customer.

Once your customer has submitted payment to us and the amount of the invoice is satisfied, any amount held in reserve is forwarded to you as well.

*Free same day ACH funding is available to our factoring clients

Use our invoice factoring calculator to see how much working capital you could unlock if you factored customer invoices instead of waiting for them to pay.

How Does Invoice Factoring Work to Free Up Working Capital?

The time you spend waiting for customers to pay represents lost opportunities – opportunities that you could use to grow more quickly if you had instant access to the working capital tied up in customer invoices. Use the invoice factoring calculator to see how much working capital your organization could access immediately by taking advantage of the invoice factoring process at DB Squared.

Opportunity Cost Calculator

Use our invoice factoring calculator to determine whether factoring receivables could expedite cash flow in your business.

  • Your Current Total Accounts Receivable
    $1,000 $5,000,000+
  • Your Average Customer Invoice Amount
    $0 $250,000+
  • Advance Rate for Factored Invoices (Advances usually range from 85-98%)
    85% 98%
  • Factoring Fee (Factoring fee usually ranges from 1-5%)
    1% 5%

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  • Expedite working capital tied up in customer invoices, without waiting for customers to pay Working Capital Unlocked $0
  • Average Factoring Fee $0

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How Does Invoice Factoring Work to Benefit an Organziation?

The need for consistent cash flow is the most common reason companies should factor invoices, and expedited cash flow is the main benefit, although not the only benefit, of invoice factoring.

Companies that need immediate access to working capital tied up in receivables can factor them in order to speed up business growth, take on new business, expand product or service capabilities, cover operating expenses, or maintain cash flow consistent with the financial needs of their business.

By creating more consistent, expedited cash flow, an organization can:

  • Negotiate discounts with vendors and suppliers
  • Take on new jobs or bigger orders more quickly
  • Meet payroll and expenses more easily
  • Stop losing time and money chasing down customer payments
  • Make needed equipment purchases, repairs, renovation or expansion
  • Extend more generous terms to their customers as a competitive advantage
  • Take advantage of fast-emerging opportunities more easily

If one or more of these benefits could help you grow your business more quickly, we would be happy to provide you with a free, no obligation proposal for receivables factoring.


Take the first step by applying for a free, no-obligation invoice factoring proposal:

Get answers in one business day – or even faster!

Benefits of the Invoice Factoring Process at DB Squared

Now that you have answers to the question, how does invoice factoring work, find out why you should factor with DB Squared.

Our Experience: Work with a team whose combined experience factoring invoices exceeds 100 years!

Reduced Financial Risk: We are a non recourse factor. Factoring with us can reduce – or even eliminate – your organization’s risk from bad debt. Find out more about recourse vs. non recourse invoice factoring.

Our Attitude: We focus on long term relationships, and that includes the care with which we approach and communicate with you and your customers. In addition, we want to earn your repeat business and referrals, so we don’t require you to sign long term contracts.

Our Transparency: No hidden fees and no surprises! Your factoring proposal will outline any and all fees that apply, as well as the percentage of invoice total that will be advanced, held in reserve and discounted. Also, there are no application, proposal, due diligence, processing, notification or funding fees.

Our Customer Service: Same day funding is available for established clients who factor invoices with us. As our factoring client, you will also have a dedicated account manager and can expect to receive a high level of customer service day in and day out.

Our Credentials: We are proud members of the International Factoring Association and agree to engage in invoice factoring in adherence to the IFA Code of Ethics.