B2B service businesses stuck on net-60/net-90 client payment terms need invoice factoring, not an MCA
B2B service businesses stuck on net-60/net-90 client payment terms need invoice factoring, not an MCA
If you run a staffing agency, a commercial cleaning company, an IT consultancy, or any B2B service business that bills clients on net-60 or net-90 terms, you already know the strange math of this kind of business: you can be profitable on paper and still not have enough cash in the bank to make payroll. You did the work. You sent the invoice. The client is good for it. You're just... waiting.
This is one of the most common cash flow traps in B2B services, and it's worth understanding why the usual fix people reach for isn't always the right one.
Why the gap happens
When you sell a product for cash, you get paid close to the moment of sale. When you sell a service to another business, the sale happens first, and the payment often happens 60 or 90 days later, once your invoice works its way through the client's accounts payable process. Meanwhile, you still have to cover payroll, rent, subcontractors, and software bills on your own timeline, not theirs.
The bigger and more corporate your clients are, the slower this usually gets. A large client with a strict net-90 policy isn't being difficult. That's just how their AP department is built. But it means your growth is limited by how fast your biggest clients pay, not by how much work you can do.
Why an MCA is often the wrong tool here
A merchant cash advance is built around a simple idea: a business with steady daily or weekly revenue (think retail or restaurant sales) gets an advance against that future revenue, repaid through a percentage of daily sales or fixed daily/weekly debits.
That structure assumes ongoing, frequent revenue flowing through the business. A service company waiting on a handful of large net-90 invoices doesn't look like that. The cash isn't trickling in daily, it's arriving in lumps, months apart. Trying to repay an MCA on a daily basis when your actual collections happen quarterly can create a second cash flow problem on top of the first one.
Why factoring fits the shape of the problem
Invoice factoring works differently: you sell an unpaid invoice (or a batch of them) to a factoring company, and they advance you a portion of its value up front, then pay you most of the remainder (minus their fee) once your client actually pays. In other words, factoring is built around exactly the situation you're in: you already have real, invoiced, owed money. You're just waiting on the clock.
Because factoring is tied directly to specific invoices rather than daily revenue swings, the repayment structure lines up naturally with when the client actually pays. That's the core difference. It's not just "faster money," it's money that matches the shape of your receivables instead of fighting against it.
This doesn't mean factoring is automatically the right fit for every business, or that an MCA is never useful for a service company. Some businesses have a mix of steady recurring revenue and slow-paying invoices, and the right answer depends on your specific mix of clients, contracts, and cash needs. A cleaning company with a handful of net-90 government contracts is a very different situation than one with mostly net-15 small business clients.
What to actually do
Before choosing a financing product, get clear on your own numbers: how much is sitting in unpaid invoices right now, how old is each one, and how predictable is your collection pattern. That picture will tell you more about which tool fits than any generic advice can.
Clover Advance is a direct funder of merchant cash advances, not a factoring company, and not a bank or broker. We fund advances with our own capital, and we're upfront that an MCA isn't the right fit for every cash flow gap, including some versions of the net-60/net-90 problem described here. If you want to talk through what your specific situation looks like and figure out what actually fits, reach out through our contact form.