Accounts Receivable Financing

Accounts receivable financing, also known as AR financing, allows companies to receive immediate funds for outstanding invoices. Companies using types of financing options for accounts receivable (AR) funding can commit invoices to a funding partner for earlier payment.

Porter Capital believes in several particular benefits of factoring services for accounts receivable funding. By taking advantage of receivables factoring, large and small businesses can increase their cash flow and avoid the strain of late payments. Taking a loan on accounts receivables helps a company obtain cash without asking clients for immediate payment.

If a company is in high growth mode, young or simply does not fall into a traditional bank box, it can utilize an accounts receivable loan or line of credit provided by Porter Capital .

Explore our range of alternative financing solutions. Discover how we can support your business objectives and facilitate growth. Find Out More.

Empower Your Business with Immediate Cash Solutions

In today’s tight credit environment, more and more companies are turning to alternative and non-traditional financing options to access the capital needed to keep business running smoothly.

Several tools are available to owners of cash-strapped businesses in search of financing that provides them with immediate cash. Two of the most popular are factoring and accounts receivable factoring (A/R financing). Many business owners lump the two together, but few small yet significant differences exist.

Accounts receivable factoring is the outright purchase of a business’s outstanding accounts receivable by a commercial financing company or “factor.” Typically, the factor advances 70% to 90% of the value of factoring receivables when it purchases the receivables.

The balance, less the factoring fee, is released when the invoice is collected. The factoring fee — which is based on the total face value of the invoice, not percentage advanced — typically ranges from 1.5% to 5.5%, depending on aspects such as the collection risk and how many days the funds are in use.

Explore Opportunities for Business Growth with AR Financing

Accounts receivable financing is more like a traditional bank AR loan but with several key differences. While traditional loans may be secured by different collateral, including plants and equipment, real estate, and/or the business owner’s personal assets, accounts receivable financing is backed strictly by a pledge of the business’s assets associated with the accounts receivable to the financing company.

Under an accounts receivable financing arrangement, a borrowing base of 70% to 90% of the qualified receivables is established at each draw against which the business can borrow money.

A collateral management fee (typically 1% to 2%) is charged against the outstanding amount. When money is advanced, interest is assessed only on the amount of money your business actually borrowed.

Typically, an invoice must be less than 90 days old to count toward the borrowing base, and the underlying business must be deemed creditworthy by the financing company. Other conditions may also apply.

As you can see, comparing factoring and accounts receivable financing solutions is tricky. One is actually a loan, while the other sells an asset (invoices or factoring receivables) to a third party.

However, both A/R financing and factoring have many similarities. Here are the main features of each option to consider before deciding which is the best fit for your company.

Accounts Receivable Financing

• Generally, less expensive than factoring.
• It tends to be easier to transition from accounts receivable financing to a traditional bank line of credit when a company becomes bankable again.
• It offers less flexibility than accounts receivable factoring because the business must submit all of its accounts receivable to the financing company as collateral.
• Typically requires a minimum of $75,000 a month in sales to qualify, so it may not be available to small business owners.

Factoring

• Offers more flexibility than accounts receivable financing, because businesses can pick and choose which invoices to sell to the factor.
• Fairly easy to qualify for and is ideal for new and financially challenged companies.
• Has a simple fee structure that helps the company track total costs on an invoice-by-invoice basis.

Leverage Cash Flow Solutions Tailored to Your Specific Business

Accounts receivable funding and financing options are a common solution for many businesses. No matter the industry you serve, we can provide a factoring line of credit you can use to take care of daily operations.

Our typical clients are start-ups or mature businesses in periods of maximum growth. If you want to bridge the gap between current and potential business opportunities, accounts receivable financing can help you stand out in your industry.

Common industries using accounts receivable factoring services include:

• Staffing: Staffing agencies manage a vast employee network, and keeping up with payroll can’t take a back seat. We offer AR financing for staffing companies to ensure fair and timely employee payment.
• Manufacturing: Because the manufacturing industry moves quickly, so must its cash flow. AR factoring services for manufacturers provide the flexibility to invest in new equipment and maximize production time.
• Distribution: Factoring invoices can be a helpful asset in the distribution industry. Distributors can use factoring to provide more reliable service times with upfront cash advances on their invoices.
• Technology: The technology industry is growing rapidly. Our accounts receivable financing for tech companies can offer 24-hour approval times for optimal cash flow.
• Gas and oil: Due to their business models, industrial and service industries are common AR factoring clients. Gas and oil factoring can improve a company’s turnaround with cash advances.

Partner with Us for Business Growth Through Accounts Receivable Financing

Your business’s greatest asset is its product. With proper accounts receivable funding, you can improve and increase your production. Small and large companies can maximize their operations with capital advances offered by our AR factoring services. See what your business can achieve with the resources to build new growth!

As one country’s leading accounts receivable financing companies, we are committed to your business’s success. The application process is quick and easy. You can apply here directly through our website. Tell us about your business, tell us what you plan to use the factoring receivables funds for, and send financials to complete your application and we will review and get you funded in as little as 24 hours!

Our accounts receivable financing rates are some of the most competitive in the industry. Reach out today to learn more about factoring accounts and our factoring contract services! We’ll help you understand how to make accounts receivable factoring work for you. These options can help small business and large companies.