Cost & Pricing
Transparent: small discount applied to invoice. No hidden fees or compounding interest.
Fees + interest + admin charges; total cost can escalate.
Interest charged on borrowed balance; often high and variable.
Control & Flexibility
Subcontractor chooses when to draw funds, invoice by invoice.
Factor manages collections, limiting subcontractor control.
Bound by bank-set credit limit, not flexible per invoice.
Impact on Relationships
Strengthens contractor–subcontractor relationship; faster pay without outside interference.
Can strain client relationships — factor may pursue your customers.
Neutral for clients, but dependent on bank’s willingness to extend credit.
Speed & Access to Funds
Fast: funds released once invoice is approved (often same/next day).
Can be quick after setup, but onboarding and checks take time.
Immediate if facility is in place, but not tied to invoice flow.
Eligibility & Risk
Based on contractor’s creditworthiness, not subcontractor’s. Keeps debt off your balance sheet.
Depends on subcontractor’s credit and may require guarantees.
Based on banking history/credit rating; adds liabilities to balance sheet.
