Invoice Factoring vs. Settlement Factoring: Key Differences
Educational overview.
Similarities
- Both convert future cash-flows to upfront cash.
- Both involve discount fees.
Key Differences
| Invoice Factoring | Settlement Factoring | |
|---|---|---|
| Collateral | Accounts receivable | Insurance-backed annuity |
| Typical Fee Range | 1–5 % / 30 days | 6–12 % effective annual |
| Legal Oversight | UCC lien; no court | Judge approval mandated |