Updated 2026-05-19

Factoring facility

The ceiling on how much total invoice funding a business can access at once under its factoring agreement.

Why it matters

A facility limit caps outstanding funded amounts. Businesses with seasonal peaks or rapid growth may find their factoring facility fills up, preventing new invoices from being funded until customers pay. Requesting a facility increase requires the factor to approve additional exposure, which may involve a credit review of the seller and its customer base. Sellers approaching the facility limit should communicate with their factor early to avoid funding gaps at critical periods.

How it appears in contracts

The facility limit or maximum funding amount appears in the Program Terms or Credit Facility section of the factoring agreement. The agreement specifies whether the limit applies to total outstanding advances or total invoice face value submitted and outstanding. Some agreements include automatic reduction provisions: the facility limit may be decreased if the seller average monthly volume drops below a threshold. Sellers negotiating a factoring agreement should understand how the facility limit interacts with credit limits for individual account debtors, since both constraints apply simultaneously.

Related terms

• Funding limit
• Credit limit
• Advance rate
• Concentration limit