Cash flow is the lifeblood of every startup and small business. Whether you’re scaling a food and beverage brand, launching a new CPG product, or navigating the early days of DTC growth, you’ve likely felt the squeeze of long customer payment terms. Even if sales are strong and POs are coming in, waiting 30, 60, or even 90 days to get paid can create major operational strain.

So what do you do when your money is tied up in accounts receivable—but you still need to pay for production, freight, marketing, salaries, or raw materials?

You factor the invoice.

What Is Invoice Factoring?

Invoice factoring is a financial tool that allows you to get paid faster by selling your accounts receivable to a third party—called a factor. Instead of waiting for your customer to pay you, the factoring company advances you the majority of the invoice amount, typically within 24 to 48 hours. Once the customer pays the invoice, the factor sends you the remaining balance, minus a small fee.

Crucially, this is not a loan. You’re not taking on debt. You’re just accelerating cash you’ve already earned.

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How Factoring Works: A Simple Example

Let’s say you issue a $50,000 invoice to a national retailer with Net 60 payment terms.

• A factoring company offers to advance 85% of the invoice immediately.
• You receive $42,500 in your account—right now.
• When the customer pays the full $50,000 to the factoring company 60 days later, you receive the remaining $7,500, minus a factoring fee (typically 1–3%).

That means you might pay $1,000–$1,500 to access $42,500 instantly rather than wait two months. That’s not just convenience—that’s growth capital.

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A Personal Note: How I Got Into Factoring

Years ago, Eric Skae—a veteran in the beverage industry—introduced me to invoice factoring. I’ll be honest: I was resistant at first. Like many founders, I didn’t love the idea of “giving up” a few percentage points on my invoices.

But over time, I saw the value of liquidity, the speed at which it enabled us to move, and how much it de-risked our operations. I’ve used it personally and now recommend it to many of our clients at Cascadia Managing Brands.

Why? Because when you compare the cost of factoring to the cost of raising money, taking on debt, or slowing down growth—it’s often a no-brainer.

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Why Factoring Makes Sense (Especially for Startups)

Some founders instinctively balk at the cost of factoring. But here’s the bigger picture:

1. Factoring Costs Less Than Dilution

Giving up 1.5% on a $50,000 invoice is nothing compared to giving up 15% of your company to raise a bridge round. Founders who are fixated on short-term margins often miss the real cost: long-term ownership erosion.

2. It’s Often Cheaper Than Loans

Loans come with interest, monthly payments, and frequently require personal guarantees or collateral. If you can even get approved. Factoring is asset-based and doesn’t increase your liabilities.

3. It Doesn’t Add Debt

Because it’s not a loan, it doesn’t sit on your balance sheet like traditional financing. That means cleaner books and no compounding obligations.

4. It Lets You Move Faster

Whether you need to place a production run, cover payroll, or fund a marketing campaign, having access to capital now keeps you nimble. In a competitive space, speed matters.

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When to Use Invoice Factoring

Factoring can be a powerful financial tool in scenarios like:

• Working with large retailers or distributors who pay slowly
• Needing upfront capital for inventory or production runs
• Managing seasonal demand spikes or cash crunches
• Wanting to offer more flexible payment terms to your customers
• Avoiding high-interest loans or dilution from equity raises

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Who We Use (And Recommend)

At Cascadia, we’ve worked with multiple factoring companies. But the one we currently recommend is Credio.

They’re fast, fair, and understand how early-stage businesses operate. They don’t treat you like a high-risk bet just because you’re not a Fortune 500. Credio has been a trusted partner for brands looking to grow without drowning in cash flow anxiety.

If you’re curious or ready to get started, contact Levi at Credio:
📧 levi@crediogroup.com

And look—if Credio isn’t the right fit, use someone else. The bigger point is: don’t ignore factoring just because it’s unfamiliar. For many brands, it’s the single smartest way to unlock working capital without giving up control or overextending your finances.

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Final Thought

Factoring isn’t about “giving up money.” It’s about protecting your company’s runway, preserving your growth momentum, and giving your team the oxygen it needs to execute.

In a world where time is money, factoring lets you buy time—on your terms.