Selling Accounts Receivable to Finance Your Business

As a business owner, your ability to operate and grow often hinges on one simple but powerful factor: consistent cash flow. It’s not uncommon to extend terms to customers—30, 60, or even 90 days after a product is delivered or a service rendered. That’s a lot of time to wait on income you’ve already earned.

One way to bridge this cash flow gap is by selling your accounts receivable.

Selling your receivables—more formally known as invoice factoring—is an increasingly popular financing solution that can bring quick liquidity to your business without taking on debt or giving up equity. At Porter Capital, we help companies unlock the capital trapped in their unpaid invoices, so they can fuel growth, meet payroll, and stay competitive in fast-moving markets.

Let’s take a closer look at how selling accounts receivable works, why companies use this strategy, and what to expect if you’re considering this solution for your business.

How Does Selling Receivables Work?

When you sell your accounts receivable, you’re transferring the rights to your unpaid invoices to a factoring company like Porter Capital. In return, we provide you with a cash advance—typically 80% to 90% of the invoice’s face value—within 24 to 36 hours.

Your customer then pays the factoring company directly. Once the invoice is paid, we send you the remaining balance, minus our agreed-upon factoring fee. This is not a loan—there’s no debt, no interest payments, and no long application process like you’d expect with a traditional lender.

At Porter Capital, we also work behind the scenes with professionalism and courtesy to ensure your customer relationships remain intact. In fact, many clients find that outsourcing accounts receivable management to our team frees up internal resources and strengthens customer communication.

Why Companies Sell Accounts Receivable for Cash

There are several reasons businesses decide to factor their receivables—but it all comes down to one thing: cash flow.

Many of our clients are successful companies that hit temporary financial roadblocks. Maybe they’re growing faster than expected, waiting too long on client payments, or experiencing seasonal fluctuations that make revenue unpredictable. Others come to us after being turned down for traditional loans or lines of credit due to limited business history, past financial issues, or lack of collateral.

Regardless of the reason, invoice factoring helps business owners:

• Maintain operations during slow periods

• Meet payroll or rent deadlines

• Take advantage of growth opportunities

• Accept larger or more frequent customer orders

• Avoid incurring additional debt

Factoring is particularly useful for industries like staffing, manufacturing, distribution, and professional services—anywhere invoices are used and cash flow delays are common.

Pros and Cons of Selling Your Accounts Receivable

Like any financial tool, factoring has its upsides and trade-offs. Here’s what we tell business owners to consider:

Pros of Selling AR

1. Immediate Access to Working Capital
Factoring is one of the fastest ways to inject cash into your business. With Porter Capital, you can get funded in as little as 24 hours from approval—no waiting for bank processing or lengthy paperwork.

2. No Debt, No Collateral Required
Unlike loans or credit lines, invoice factoring doesn’t show up as debt on your balance sheet. There’s also no need to put up hard assets like real estate or vehicles.

3. Flexibility on Your Terms
You choose which invoices to factor, when, and how often. This is ideal for businesses experiencing inconsistent demand or undergoing expansion.

4. Easier Qualification Requirements
Factoring decisions are based more on the creditworthiness of your customers—not your business. That makes it a viable option for newer companies, startups, or businesses recovering from financial setbacks.

5. A/R Management Support
When you work with Porter Capital, you get more than capital—you get a partner. We help manage collections, process invoices, and keep your accounts receivable streamlined and stress-free.

6. Stronger Customer Relationships
With more capital in hand, you can invest in staffing, equipment, or systems that improve your service delivery. And because we handle collections with professionalism, your customers get better communication and more flexible payment options.

Cons of Selling AR

1. Reduced Profit Margins
Factoring comes with a fee—typically a percentage of the invoice value. While this slightly reduces your profit, many businesses find the tradeoff worth it for predictable cash flow and stability.

2. Customer Credit Impacts Eligibility
Your clients’ creditworthiness plays a big role in your ability to factor invoices. If they have a history of late payments or defaults, factoring those invoices may not be possible.

3. Risk of Non-Payment Still Exists
Unless you opt for non-recourse factoring, you’re still responsible if a customer fails to pay. At Porter, we offer both recourse and non-recourse options so you can choose the level of risk you’re comfortable with.

4. Misconceptions About Factoring
There’s still some stigma around invoice factoring—especially from those who misunderstand it as a “last resort” for struggling businesses. But the reality is that many thriving, growing companies use factoring to stay agile and debt-free.