When considering using your invoices to increase your available cash flow remember that a factoring company can only age a particular invoice for 90 days. So if you are doing business with a customer and extend terms beyond a ninety day period, say six months, then factoring might not work for you. The reason stems from the arrangement a factor has with its funding source, usually a bank. The bank lends money to the factor who then turns around and makes advances to their clients. When calculating the available credit to the factor, any outstanding invoice over 90 days is considered a non-performing asset and is deducted from the available credit line.
This is about the flow of money and credit. All the pieces of the puzzle interact with each other and rely on terms being met on time.