Your business is growing, your customers are paying, but cash flow timing is killing opportunities and causing you stress. While your books show strong B2B sales and reliable commercial customers, immediate expenses like payroll, inventory purchases, and equipment costs can’t wait 30, 60, or 90 days for invoice payments. Understanding invoice factoring requirements is crucial if you’re a fast-growing business in British Columbia, Alberta, Manitoba or Ontario watching opportunities slip away due to working capital constraints.
Core Invoice Factoring Requirements
Unlike traditional bank loans that scrutinize your financial ratios, invoice factoring focuses on your customers’ creditworthiness and payment reliability. To qualify, your business should:
● Operate in the B2B (business-to-business) sector
● Typically serve mid-to-large sized, creditworthy commercial customers
● Generate invoices with totals of $1,500 or more, with standard payment terms
● Show a consistent pipeline of future business with established customers
● Demonstrate reliable customer payment history and strong relationships
● Maintain gross margins of 20% or higher (minimum 15% considered)
Key Insight: Even if traditional banks have declined your application due to strained banking relationships or being under-capitalized, you may still qualify if your customers have good payment records and sufficient purchasing power.
Invoice and Customer Criteria
Your invoices and customer relationships must meet these specific standards:
● Clean, unencumbered invoices free from liens or disputes
● Standard payment terms (net 30, 60, or 90 days)
● Verifiable completion of work or delivery of goods/services
● Regular, predictable billing cycles
● Established relationships with mid-to-large commercial customers
● Clear accounts receivable records and basic financial reporting systems
Industry Sweet Spots
Certain industries align perfectly with invoice factoring, especially those facing the cash conversion timing gap between service delivery and payment:
Staffing and Temporary Employment
Perfect for managing weekly payroll while waiting 30-60 days for client payments. If you’re rapidly growing with new corporate or government contracts but cash flow is strained, factoring provides the bridge funding you need for reliable payroll coverage
Oilfield Services
Ideal for service providers working with large oil & gas companies facing 60-90+ day payment terms. Whether you provide drilling support, equipment rental, maintenance, or logistics, factoring helps cover equipment, labor, fuel, and insurance costs while waiting for payment on strong contracts.
Distribution Companies
Excellent for growing distributors squeezed between supplier terms (pay fast) and customer terms (get paid slow). Factoring provides working capital to handle seasonal peaks, large customer orders, and significant inventory purchases ahead of customer demand.
Manufacturing
Strong fit for manufacturers needing upfront financing for raw materials, production, and labour costs. Particularly valuable when winning larger contracts that require production ramp-up while customers pay 30-90 days after delivery.
Technology Services
Valuable for software or service companies with strong monthly recurring revenue (MRR) or established subscription agreements. Especially useful for bridge financing between funding rounds or expansion capital. We could even get you an advance on your Scientific Research and Experimental Development (SRED) refund.
Transportation and Logistics
Well-suited for companies managing long payment cycles while covering fuel, equipment maintenance, and driver costs upfront.
Financial Requirements
While factoring offers more flexibility than traditional bank financing, some basic criteria apply:
● Annual revenue typically $1M-$50M Gross margins of 20% or higher (minimum 15% considered)
● Clear accounts receivable records and basic financial reporting
● No active tax arrears or significant unresolved tax issues (can we pay these off with the capital we provide?)
● Limited bad debt and customer disputes
● Private corporations preferred
What Could Disqualify You?
Be aware of these potential roadblocks:
● Primarily retail or consumer customers (B2C focus)
● Pre-billed work, or progress-billed work without delivery confirmation and clear milestones
● Ongoing, unresolved customer disputes
● Significant tax arrears or compliance issues
● High amount of bad debt or payment defaults
● Invoice sizes consistently under $1,500
Facility Sizes and Terms
At Capitally, we typically provide:
● Facilities between $250,000 and $4 million
● Access to a 75% or higher advance on your invoice value
● Flexible terms without restrictive long-term contracts
● Prompt approval process
● Comprehensive online reporting and account management
● SRED financing available ($100,000+ for established filers)
Success Story: From Banking Rejection to Growth Success
Consider UFT Canada’s transformation. Founder Steven Lee faced the common challenge of managing cash flow while pursuing ambitious growth goals. Traditional banks couldn’t provide the flexible funding needed for expansion, and their banking relationship was strained due to rapid growth demands.
When the Business Development Bank of Canada (BDC) recommended Capitally’s invoice factoring solution, everything changed. By converting outstanding invoices into immediate working capital, UFT gained the financial flexibility needed to support growth without traditional debt constraints.
“Without invoice factoring from Capitally, we would have great difficulties with cash flow. It would have been difficult to grow so quickly,” shares Steven Lee.
This success story illustrates a crucial point: Even when traditional banks decline your application, your business may still qualify for invoice factoring if you have strong customer relationships and reliable receivables.
Ready to Move Forward?
Don’t let working capital constraints limit your growth potential. If you’re generating B2B invoices with creditworthy, mid-to-large customers in BC, Alberta, Manitoba or Ontario, you likely meet the basic invoice factoring requirements for approval.
Whether you’re experiencing rapid growth, recovering from specific setbacks like partner payouts, or simply need bridge financing for opportunities, factoring can provide the solution traditional banking cannot.
Take the first step: Contact Capitally for a no-obligation consultation. Our local experts in Western Canada and Ontario understand your market challenges and can quickly determine if invoice factoring aligns with your business needs.
Trusted by leading referral sources: Banks (including BDC), accounting firms, and interim/fractional CFOs regularly recommend our services to clients facing working capital challenges.
Let’s turn your outstanding invoices into immediate working capital and fuel your next growth phase.
