Accounts Receivable Financing

How Does it Work

Account receivable financing leverages the value of an existing asset to enhance the liquidity of that asset. This is not a “debt.” You are essentially selling an asset. But it is more than that; it is like outsourcing your accounts receivable department. Accounts Receivable purchasers, known as Factors, provide valuable services. They check your customers’ credit for you and notify you of bad risks and they provide detailed monthly statements. Qualifying accounts even get free credit insurance.

Accounts Receivable Financing and Factoring is a simple process. The lender will advance you between 70% and 90% of the amount of the invoice. For example you could receive 80% of the outstanding invoice(s) you choose to finance on the day you bill. When your customers pay their invoices you will receive the remaining 20%, less any interest charges.

Companies that are start-ups, losing money, or in bankruptcy can take advantage of accounts receivable financing because financing is based on your customer’s credit, not yours.