July 17, 2024

Invoice Purchase and Credit Scores: What You Need to Know

In the world of business, smooth cash flow is king. But unexpected delays in receiving payments from clients can disrupt that flow and cause headaches. This is where invoice factoring, a financial tool, comes in. It allows businesses to sell their invoices to a factoring company for immediate cash, minus a fee. However, a lesser-known option is invoice purchase. Similar to factoring, it provides quick access to funds, but there are some key differences that can impact your credit score.Sälja faktura

Invoice Purchase vs. Factoring: Understanding the Distinction

Both invoice purchase and factoring offer upfront cash for your unpaid invoices. However, the key difference lies in who assumes the risk of non-payment by the client.

  • Invoice Factoring: In factoring, you sell the invoice at a discount, but the factoring company assumes the risk of non-payment. This means if your client fails to pay, the factoring company takes the loss, not you. This can be beneficial for businesses with a history of slow-paying clients. However, factoring fees can be higher compared to invoice purchase.
  • Invoice Purchase: With invoice purchase, you sell the invoice outright to the purchaser. They then handle collection from your client. Unlike factoring, if your client doesn’t pay, it becomes your responsibility to collect the debt. This can be a risk, but invoice purchase fees are typically lower than factoring fees.

The Impact of Invoice Purchase on Your Credit Score

Since invoice purchase doesn’t involve a credit line or loan, it generally doesn’t directly impact your credit score. However, there are some indirect ways it can influence your creditworthiness:

  • Payment History: This is the most significant factor affecting your credit score. Late payments on the repurchased invoice (i.e. if your client doesn’t pay you back after the purchase) could be reported to credit bureaus by the invoice purchaser, negatively impacting your score.
  • Debt-to-Income Ratio: While invoice purchase itself isn’t considered debt, some lenders might view it as a sign of cash flow issues, potentially affecting your ability to secure future loans.

Here’s how to mitigate potential risks and protect your credit score when using invoice purchase:

  • Choose a Reputable Invoice Purchaser: Work with a legitimate company with a proven track record. Ensure they have transparent fee structures and clear communication regarding late client payments.
  • Maintain Open Communication: Keep the invoice purchaser informed of any potential delays or communication issues with your clients.
  • Prioritize Client Communication: Proactive communication with your clients about payment terms and expectations can help avoid late payments and potential repurchase scenarios.
  • Monitor Your Credit Report: Regularly check your credit report for any errors or delinquencies related to invoice purchases. You can obtain a free credit report from each of the three major credit bureaus (Experian, Equifax, and TransUnion) annually.

Invoice Purchase: A Viable Option for Businesses

Invoice purchase can be a valuable tool for businesses seeking immediate cash flow. However, it’s crucial to understand the potential risks and how they can impact your credit score. By choosing a reputable purchaser, prioritizing communication, and monitoring your credit report, you can leverage invoice purchase effectively while safeguarding your financial health.

Additional Considerations

  • Alternatives to Invoice Purchase: Explore alternative financing options like business lines of credit or short-term loans, depending on your needs and creditworthiness.
  • Negotiate Payment Terms: If possible, negotiate better payment terms with your clients to reduce reliance on invoice purchase and potential credit score risks.


Invoice purchase offers a solution for businesses needing immediate access to cash. By understanding the potential impact on your credit score and taking appropriate measures, you can utilize this financial tool strategically to optimize your cash flow and maintain a healthy credit standing.

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