Accounts Receivable Financing

AR financing isn't technically a loan you're either selling your invoices (factoring) or using them as collateral for a line of credit. This means it typically doesn't add debt to your balance sheet the same way a loan does, which can be important for businesses watching their debt ratios. Qualification is based primarily on your customers' creditworthiness rather than your own, making it accessible even for businesses with limited credit history.

Most AR financing providers advance 70–90% of the invoice face value upfront. The remaining balance (minus fees) is released once your customer pays. Advance rates depend on your industry, the creditworthiness of your customers, and the average invoice size and payment terms. Invoices from large, creditworthy companies typically qualify for higher advance rates.

Once you're set up with an AR financing provider, funding is typically available within 24–48 hours of submitting invoices. Initial setup and approval takes 1–3 days for most providers. This makes AR financing one of the faster ways to access cash especially compared to waiting 30, 60, or 90 days for customers to pay on standard net terms.

It depends on the type. With invoice factoring, customers are typically notified to send payments directly to the factoring company. With invoice discounting, customers often aren't notified since you retain collection responsibility. If maintaining confidentiality is important to your business relationships, ask providers about non-notification or confidential factoring programs.

AR financing is most common in B2B industries with long payment terms: trucking and freight, manufacturing, staffing and temp agencies, wholesale distribution, construction, healthcare, and professional services. Any business that invoices other businesses on net terms (net-30, net-60, net-90) can benefit from converting those receivables into immediate cash.