Introduction
Private equity firms are known for driving growth, streamlining operations, and maximizing returns across their portfolios. But even well-managed portfolio companies can face liquidity issues, especially after an acquisition or during a growth surge. That’s where accounts receivable financing for private equity becomes a game-changing tool.
Accounts receivable (AR) financing allows companies to unlock capital tied up in unpaid invoices. For PE-backed businesses, this means fast, non-dilutive working capital without taking on additional debt or giving up equity. PE firms can use this financing tool to bridge gaps between equity infusions or during growth phases. This blog explores how AR financing helps private equity firms fuel growth, stabilize operations, and drive ROI.
The Challenges Faced by Portfolio Companies
Many portfolio companies operate in industries where long payment terms are the norm. This often creates significant cash flow gaps, especially post-acquisition or during a rapid scaling phase.
Common challenges include:
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Delayed customer payments causing strain on day-to-day operations.
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Traditional bank loans being slow to secure, overly rigid, or unavailable due to recent ownership changes.
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The need to support growth or a turnaround—without diluting ownership or increasing the company’s debt burden.
These challenges call for a more agile and flexible financing solution.
What Is AR Financing (Accounts Receivable Financing)?
Accounts receivable financing enables companies to advance funds against their outstanding invoices. Rather than waiting 30, 60, or even 90 days for customer payments, businesses can access cash in as little as 24–48 hours.
How it works:
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The company submits its eligible receivables to the financing provider.
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An advance (typically 80–90%) is issued quickly.
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Once the customer pays the invoice, the remainder is released—minus a financing fee.
Key benefits:
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Unlocks fast access to working capital when timing is critical.
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Offers flexible terms tailored to portfolio company needs.
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Financing can scale in direct alignment with revenue growth.
Why AR Financing Appeals to Private Equity Firms
Accounts receivable financing for private equity firms isn’t just a funding solution—it’s a strategic advantage. Here’s why it resonates with today’s PE landscape:
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Non-dilutive capital: Keep equity structures intact and avoid giving up additional ownership to raise capital.
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Scalable funding: As portfolio companies grow and issue more invoices, available financing naturally increases.
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Improved working capital: Frees up cash to fund payroll, expand operations, or support acquisitions—without waiting on slow customer payments.
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Bridge to traditional lending: AR financing can be a short-term solution that positions a company to qualify for bank loans in the future.
Real-World Scenarios
Here are a few examples of how accounts receivable financing for private equity portfolios can make an immediate impact:
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Post-acquisition payroll: A recently acquired staffing company needed to meet payroll but had customers on 60-day payment terms. AR financing provided the liquidity to bridge the gap without missing a beat.
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Distressed turnaround: A manufacturing company in a turnaround phase used AR financing to stabilize operations while restructuring. The flexible capital helped restore vendor relationships and keep production moving.
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Growth-stage acceleration: A tech-enabled logistics firm in growth mode used AR financing to fulfill new contracts, hire staff, and maintain momentum—without taking on costly short-term loans.
Example: One of our clients, a PE-backed industrial staffing agency, secured a $3.5M AR facility to meet payroll, fund operations, and support rapid expansion after a new acquisition.
What PE Firms Should Look for in an AR Financing Partner
Not every financing provider is equipped to handle the needs of private equity portfolios. Look for a partner with:
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Speed and certainty: Fast approvals and funding timelines to meet urgent capital needs.
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Industry expertise: Familiarity with staffing, manufacturing, healthcare, and logistics.
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Creative structuring: The ability to tailor funding solutions to complex ownership or operational structures.
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Reliable service model: Dedicated account reps, clear reporting, and proactive credit monitoring.
Why Private Equity Firms Choose Porter Capital
When portfolio companies face tight cash flow, delayed payments, or aggressive growth timelines, traditional lending options often fall short. That’s where Porter Capital steps in. We specialize in accounts receivable financing for private equity portfolio companies. Porter Capital works with our private equity partners to provide fast, flexible, and non-dilutive capital to support acquisitions, turnarounds, and expansion strategies.
Our experience spans a wide range of industries and transaction types—from newly acquired companies and distressed assets to rapidly scaling businesses. Whether you’re looking to stabilize operations or fuel long-term growth, Porter Capital delivers customized solutions designed to maximize value across your portfolio.
Partner with a financing provider that understands the pace and complexity of private equity. Call us at 1-888-865-7678 or submit a referral to learn more about how we can support your firm and your investments.
