AR Financing
Revolving credit line secured by your accounts receivable. Access capital as you generate invoices, without the customer notification of traditional factoring.
Working capital that scales with your invoicing, not against it.
The problem
Factoring purchases individual invoices. AR financing builds a credit facility around your entire receivables portfolio. The distinction matters.
With factoring, you sell invoices individually, your customers are notified, and a third party handles collections. With AR financing, you draw against a revolving credit line secured by your receivables ledger. Your customers pay you directly. They are not notified. You manage the relationship.
Your sales are growing. Your accounts receivable balance is increasing. You have hundreds of thousands in outstanding invoices. The cash is locked up, waiting for customers to pay in 30, 60, or 90 days. Meanwhile, payroll, vendors, materials, and operations require capital today.
The result
You're asset-rich but cash-poor. Growth is constrained by the timing mismatch between invoicing and payment.
The solution
Accounts Receivable financing provides a revolving credit line secured by your receivables portfolio. Draw capital as you generate invoices, repay as customers pay. Your available credit grows automatically as your invoicing grows. You maintain full control of customer relationships.
The mechanics
AR financing is a revolving credit facility secured by your accounts receivable. Unlike factoring, customers typically aren't notified and continue paying you directly. It's structured more like a traditional credit line but based on your receivables value rather than general creditworthiness.
We evaluate your accounts receivable portfolio: customer quality, payment history, aging. Based on this, we establish a revolving credit line (typically 75-85% of eligible receivables under 90 days).
As you generate invoices, your borrowing base increases. Draw on the line when you need capital for any business purpose. You maintain customer relationships and receive payments directly.
Customers continue paying you according to their normal terms. They're typically not notified about the financing arrangement. You maintain full control of customer relationships.
As customers pay invoices, you can draw again for new invoices. The credit line revolves automatically. Available credit adjusts based on your current receivables balance.
Why it works
As your sales and invoicing increase, your available credit increases automatically. No need to constantly request limit increases. The facility grows with your business naturally.
Unlike factoring, customers typically aren't notified and continue paying you directly. You maintain full control of customer relationships without third-party involvement in collections.
Unlike PO financing (order-specific) or factoring (invoice-specific), AR financing provides flexible working capital you can use for any business need: payroll, vendors, equipment, growth opportunities.
Draw when you need capital, repay as customers pay you. Continuous access to working capital based on your receivables. Not a one-time transaction but an ongoing facility.
Combines the best of both: faster approval than banks (1-2 weeks vs. 4-8 weeks), more control than factoring (customers aren't notified, you handle collections).
Fit
AR financing works best for B2B companies with consistent invoicing and good customer payment history. Here's who typically benefits:
B2B Companies — You invoice other businesses on payment terms (Net 30-90)
Consistent Invoicing — Regular monthly invoicing, not sporadic or project-based
Creditworthy Customers — Customers have good credit and pay reliably (even if slowly)
Established Relationships — You want to maintain customer relationships without third-party notification
Growing Businesses — Sales growing faster than your ability to self-fund the receivables float
Control-Oriented — You prefer handling your own collections and customer communication
B2C business with immediate payment (credit cards, cash)
Customers with poor credit or unreliable payment history
Very small invoicing volume (under $50K monthly)
Prefer someone else handle collections (factoring may be better)
Need order fulfillment funding (PO financing needed instead)
AR financing serves B2B companies with consistent invoicing and established customer payment patterns: professional services, manufacturing, healthcare, distribution, technology, construction, and transportation. Companies with $5M+ in receivables and a preference for managing their own customer relationships are the strongest fit.
Tell us a little about your receivables and we'll come back with real numbers: facility size, advance rate, and timeline.
Same-day preliminary answer
The alternatives
| AR Financing | Invoice Factoring | Asset-Based Lending | Bank Line of Credit | |
|---|---|---|---|---|
| Customer Notification | Typically no | Usually yes | No | No |
| Who Handles Collections | You do | Factor does (notification) | You do | You do |
| Collateral | Receivables only | Receivables only | Receivables + inventory + equipment | Various |
| Structure | Revolving credit line | Transaction-by-transaction | Revolving credit line | Revolving credit line |
| Speed to Setup | 1-2 weeks | 3-5 business days | 2-3 weeks | 3-6 weeks |
| Ongoing Funding | Draw as needed | Submit invoices | Draw as needed | Draw as needed |
| Best For | Control + flexibility | Speed + outsourced collections | Larger companies, multiple assets | Established companies, strong credit |
| Typical Size | $100K-$5M | $50K-$3M | $1M-$50M+ | Varies widely |
Both finance receivables, but AR financing is structured as a credit line (you maintain customer relationships, handle collections). Factoring involves selling invoices (factor notifies customers, handles collections). AR financing = more control. Factoring = faster setup, outsourced collections.
ABL finances multiple assets (receivables + inventory + equipment) and is better for larger companies ($5M+ revenue). AR financing focuses only on receivables and works for mid-sized companies. ABL = more complex, higher minimums. AR = receivables-only, more accessible.
Bank lines require strong credit history and often personal guarantees. AR financing focuses on your customers' creditworthiness. Bank lines are rigid (fixed limits, slow increases). AR lines scale automatically with receivables growth.
Getting started
Discuss your business, typical monthly invoicing, customer base, and payment terms. We'll assess whether AR financing makes sense and estimate potential facility size.
Provide accounts receivable aging, customer list, and recent financial statements. We'll evaluate customer creditworthiness and receivables quality to determine advance rates.
We review your customers' credit and payment history. Since they're paying you (not us), their credit quality determines your borrowing base and rates.
Present facility terms showing borrowing base calculation, advance rate, pricing, and reporting requirements. Clear explanation of how the facility works and scales.
Complete loan documentation, file UCC liens, and activate the facility. First draw typically available within 24 hours of facility activation.
Typical timeline: 1-2 weeks from initial contact to facility activation (subsequent draws within 24 hours)
Common questions
Both finance receivables, but the structure differs. AR financing is a credit line secured by receivables. You maintain customer relationships and handle collections. Factoring involves selling invoices to the factor who then collects from your customers. AR financing gives you more control. Factoring is faster to set up and outsources collections.
Typically no. Customers continue paying you directly and usually aren't notified about the financing arrangement. We file UCC liens (public record) but don't directly notify customers unless there's a default situation.
Typically 75-85% of eligible receivables (invoices under 90 days from creditworthy customers). The exact advance rate depends on your customer credit quality, payment history, and industry. Your borrowing base adjusts as receivables levels change.
Eligible receivables are typically: (1) From creditworthy customers with good payment history, (2) Under 90 days old, (3) Not in dispute, (4) From delivered goods/completed services, (5) Free from other liens. We'll clearly define eligibility criteria for your facility.
You typically finance your entire receivables portfolio (whole ledger approach), but you only draw the capital you actually need. Having all receivables in the borrowing base calculation gives you maximum flexibility and usually better rates.
Your borrowing base adjusts regularly based on your current receivables, typically calculated monthly or even daily in some structures. As you invoice customers, available credit increases. As customers pay, those receivables fall off but you can draw for new invoices.
Typically monthly accounts receivable aging reports and occasional financial statements. Reporting requirements are less intensive than ABL (no field exams) but more than factoring. We'll clearly explain reporting obligations.
Yes. Unlike PO financing (tied to specific orders) or equipment financing (tied to specific assets), AR financing provides flexible working capital you can use for any business need: payroll, vendors, materials, equipment, growth opportunities.
This depends on whether the facility is recourse or non-recourse. Most AR financing is recourse, meaning you're ultimately responsible if a customer doesn't pay. We mitigate this by only advancing against creditworthy customers with good payment history.
AR financing facilities are typically structured for 1-3 year terms with renewal options. Many companies use AR financing long-term as a permanent part of their capital structure. Others transition to bank financing once they're larger and more established.
In practice
IT Services Company
Healthcare Staffing
Marketing Agency
Distribution Company
If you prefer faster setup and don't mind customers being notified, factoring may be a better fit. Typically 3-5 business days to first funding vs. 1-2 weeks for AR financing.
Learn moreIf you're larger ($5M+ revenue) and have inventory/equipment in addition to receivables, ABL provides a broader facility across all three asset classes. Typically $1M+ facilities.
Learn moreIf you need to fund specific large orders before invoicing, PO financing helps. Can be combined with AR financing for complete order-to-cash solution.
Learn moreWhether you're managing growth, smoothing cash flow timing, or need flexible working capital that scales with your sales, AR financing provides capital while you maintain full control of customer relationships.
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