Accounts Receivable Factoring

Financing designed to help your business stay ahead when your cash flow falls behind.

A top view looking down on a pair of hands typing on a laptop with a notebook and pencil to the left of the laptop and graphs and tables on the laptop screen

What is Accounts Receivable Factoring and How Does it Work?

Accounts receivable factoring, often referred to simply as factoring, is a financial transaction where a business sells its accounts receivable (unpaid invoices) to a third-party financial institution, known as a factor. The factor then advances a certain percentage of the total invoice value to the business upfront, providing immediate cash flow.

The factor assumes responsibility for collecting payments from the customers who owe the invoices.

Calendar icon with dollar sign surrounded by an arrow.

Flexible

Weekly/daily payments

Bar graph icon with arrow pointing upwards and gear symbol with dollar sign

Scalable

Offers from $5k-$300k

Small building icon with cash flow, customer satisfaction and bar graphic thought bubble

Dependable

Over 20,000 small businesses funded

What are the Advantages?

  • Immediate Cash Flow | Convert your accounts receivables into cash.
  • Improved Working Capital | Maintain healthy working capital by accelerating the collection of receivables.
  • No Debt Incurred | Access cash without incurring debt.
  • Credit Risk Mitigation | The factor assumes the credit risk of your business’s customers.

Minimum Requirements

Accounts receivable factoring is used for small to medium-sized enterprises to manage working capital effectively.

  • 6+ months in business
  • Fair/good credit score
  • $100k annual revenue
  • U.S. based business locations

FAQs

How Small Businesses Have Used Accounts Receivable Factoring Loans or Fundings

Factor financing offers businesses a lifeline by converting outstanding invoices into immediate cash. With this infusion of capital, businesses can enhance cash flow, fuel expansion initiatives, manage seasonal fluctuations, navigate rapid growth, and mitigate credit risk.

By leveraging factor financing, businesses can unlock their full potential and propel growth without being hindered by cash flow constraints.

More Reading