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Accounts Receivable Financing

A/R (accounts receivable) financing, also referred to as factoring, allows the business owner to receive capital in the event you are owed money for services completed.

If your small business is in a crunch because your services are provided and payment is not collected for 30 days or more after the work is completed, there are financial factoring companies that can help. The companies will take a look at your clientele who is owing you money and depending on their credibility the financial company will advance funds and then collect the funds from your client to pay the advance off. This can be optimal because the focus is on the business that owes the receivable and not the company receiving the advance.

Quick facts and Requirements

Loan Amount

Up to 90% of A/R

Loan Term

1 - 3 Years

Factor Rate

As Low As 5%

Time to Funds

As Little As 48 Hrs

Benefits & Drawbacks

Typically lower factor rates
Time savings for collecting A/R
Doesn't require any collateral
Customers may prefer to deal directly with you
Financing costs may exceed

What is Accounts Receivable Financing?

A/R financing (factoring) is the selling of purchase orders or accounts receivables for cash now. This type of financing allows the business owner to receive capital in the event you are owed money for services completed.

Qualifying

The credit rating of the orderer is key in determining eligibility for this type of loan, not yours. The job or service you’re providing must be fully completed and make sure you have a clear business record.

What Types of Businesses is it Good For?

This type of financing is valuable when a contract for products or services is received, but the business lacks the cash to fulfill on the contract.

What are the Minimum Requirements?

The orderers credit rating is key in determining eligibility for the loan. Personal credit is not usually examined by the lender when determining approval. You need to be invoicing creditworthy businesses for your product or service.

How Much Will A/R Financing Cost?

A/R Financing Loan CalculatorThe rates are generally lower than what you would receive with a cash advance loan or a daily payment loan depending on the strength of the creditor. There also can be an additional cost per invoice fee.

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