Accounts Receivable Financing
Accounts receivable (A/R) financing, also known as invoice financing or factoring, converts unpaid customer invoices into immediate working capital. Instead of waiting 30, 60, or 90 days for clients to pay, you advance 80–95% of an invoice's value within 24–48 hours.
What You Need to Know
Accounts receivable financing turns the gap between invoicing a customer and getting paid into immediate working capital. There are two common structures: invoice factoring (you sell invoices to a factor who collects directly from your customers) and invoice financing or A/R lending (you borrow against the invoices and retain collections). Advance rates typically range from 80% to 95% of the invoice value, with the remainder (less fees) released once the customer pays. Total cost runs from 1.5% to 5% per month, depending on customer credit quality, invoice age, and total facility size. A/R financing is one of the few funding products that scales automatically with your business, as sales grow, the available credit grows. It's particularly valuable for industries with long payment cycles like staffing, manufacturing, wholesale distribution, transportation, and B2B services. Approval is typically based on the credit quality of your customers rather than your own business credit, so newer companies and those with sub-prime owner credit often qualify when traditional loans would not. Funding speed is fast: most facilities can be set up in 5–10 business days, and once approved, individual invoice advances arrive in 24–48 hours. Common eligibility requirements include $10,000+/month in B2B invoices, customers with reasonable credit standing, and an organized AR aging report.