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What is e-factoring?

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E-factoring is a digital form of factoring where businesses sell their outstanding invoices online to a factoring company. In exchange, the company receives an advance on the invoice amount — often within just a few days, or even within 24 hours. The factoring provider then takes over the responsibility for collecting the payment from the customer.

This type of financing is primarily used to improve cash flow. By using e-factoring, you don’t have to wait for customers to pay — you gain quick access to working capital.

Table of contents:

Who is e-factoring for?

E-factoring is especially popular among:

  • Freelancers and self-employed professionals who experience long payment delays
  • Small and mid-sized businesses with limited reserves or seasonal expenses
  • Companies looking to grow quickly and needing access to additional working capital
  • Industries where extended payment terms are common, such as construction, logistics, and professional services

Thanks to digital platforms, e-factoring is now more accessible than traditional factoring. The process can be completed quickly and is often largely automated.

For more information, check out our article: Factoring for freelancers.

Pros and cons of e-factoring

Pros

  • Fast payments — often within 24 to 48 hours
  • Improved cash flow
  • No need to manage collections yourself
  • Option to transfer the risk of non-payment

Cons

  • E-factoring comes at a cost — typically a percentage of the invoice amount is withheld
  • Less control over customer communication and the collection process
  • Not all invoices are accepted (a risk assessment is usually required)
  • It may confuse your customer if a third party unexpectedly takes over the payment process

Why Payt is a smart alternative to e-factoring

Payt does not offer e-factoring, but we do help businesses get paid faster — without the need for a third-party factoring provider.

With Payt’s accounts receivable software:

  • You send professional invoices with automated follow-ups
  • You set reminders on your own terms
  • You enable customers to pay and ask questions through the invoice portal
  • You maintain real-time insight into outstanding invoices and payment behavior

Companies using Payt get paid 30 to 50% faster on average. That makes Payt a solid long-term solution to liquidity challenges — without the high costs associated with e-factoring.

Curious how Payt can support your business? Download our brochure below.

Frequently asked questions

Costs vary by provider, but typically range between 1% and 5% of the invoice amount. Additional fees may apply for higher-risk clients or longer payment terms.

E-invoicing refers to the digital sending and receiving of invoices (e.g. using UBL format). E-factoring is about financing — you sell your receivable to a factoring company, which then collects the payment.

Yes, especially in industries with long payment terms. Thanks to digitization, e-factoring has gained significant popularity in recent years.

No, Payt does not offer e-factoring. Instead, we focus on improving accounts receivable processes and speeding up payments through automation.

When working with a trusted and certified factoring provider, e-factoring is generally safe. Just make sure to review the terms, fees, and how customer communication is handled.

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By Xindu Hendriks

Xindu is an expert in digital strategy and accounts receivable management at Payt. She is known for her analytical approach.

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