Accounts Receivable Financing
Borrowing against your outstanding invoices while you keep ownership and continue collecting from customers yourself.
Accounts receivable financing (AR financing) lets you borrow against the value of your outstanding invoices without selling them. The financier advances a percentage of your eligible receivables and is repaid as those invoices are collected — but unlike invoice factoring, you generally keep ownership of the invoices and continue collecting from your customers yourself.
That difference is the main reason operators choose it. Because your customers keep paying you directly, the arrangement is more discreet and preserves the customer relationship, which matters when a big account would rather not deal with a third-party factor. The receivables effectively act as the backing for the advance.
AR financing fits B2B operators with reliable customers and a book of net-30 or net-60 invoices who want to smooth the gap between doing the work and getting paid. Compare it to factoring and to a general working capital advance on cost, control, and whether your customers are involved.
Frequently asked
How is accounts receivable financing different from factoring?
In AR financing you usually keep ownership of the invoices and keep collecting from customers yourself. In factoring, you sell the invoices and the factor typically collects. AR financing is generally more discreet.
Who uses accounts receivable financing?
B2B operators with dependable customers and a book of slow-paying invoices — staffing, wholesale, manufacturing, and services firms bridging net-30 or net-60 gaps.
What does accounts receivable financing cost?
Cost depends on invoice volume, customer credit, and how long invoices take to pay. Compare the effective total cost against factoring and a general working-capital advance.
Related terms
Selling unpaid invoices to a factor at a discount for immediate cash, with the factor often collecting from your customer.
Payment terms that give a customer 30 days from the invoice date to pay the balance in full.
Payment terms that give a customer 60 days from the invoice date to pay — roughly double the cash-flow gap of net-30.
The cash a business uses to cover day-to-day operations — payroll, inventory, and the timing gaps in between.
An approval approach that weighs your real deposit activity and cash flow over the owner’s credit score.
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