When companies need financing, a traditional loan is usually their first thought, but there are a number of ways that invoice factoring is the better choice. While a bank loan requires extensive collateral and a strong credit history, invoice factoring does not require collateral, and even smaller or newer businesses can apply. This is because, instead of looking at your personal or business credit score, the factoring company is more concerned with how likely your customers are to pay their invoices. This is why they will perform their credit checks on your clients instead of you. The approval process for a bank loan is also known to be lengthy and strict, but you can get approved for invoice factoring on the same day and get your cash advance soon after. Plus, the factoring fee will cost you a lot less than the interest you would face on a bank loan.