Factoring or a line of credit when customers pay in 60 days?

If your customers are creditworthy commercial accounts and the gap is a timing problem rather than a margin problem, a line of credit is the cheaper instrument — but factoring is the one you can have this week, and at $2.4 million with weekly payroll that speed has a real value you should price honestly.

Run the two side by side on the same dollar. Factoring is priced per invoice, commonly 1% to 5% for the first 30 days, with 80% to 90% advanced up front and the balance released when your customer pays. A line is priced as interest on what you actually draw, so a $200,000 balance carried for 45 days costs materially less than factoring that volume every month. The catch is qualifying: a line looks at your financials, factoring looks at your customers.

One warning about factoring paper. Many agreements carry a whole-ledger requirement, a monthly minimum, and a 12-month term with a termination fee, so a facility you took for one slow quarter can follow you for a year. Read the notification terms too — your customers usually learn you factored, and in some trades that is a conversation you would rather not have.

At your volume the realistic path is a Business Line of Credit, with Invoice Factoring as the bridge while the line is underwritten. Call the desk with an aging report — the customer concentration inside it decides which of the two a lender will actually offer.