Accounts receivable financing is a business option which can help owners of small to medium-sized businesses cover gaps in cash flow, such as those resulting from slow-paying customers. When your invoices aren’t promptly paid, that can leave you short of capital for meeting your payroll, for purchasing raw materials, and for managing daily expenses. Bank loans can’t usually be approved or completed quickly enough to help in these situations, so a more ready source of capital is required, and receivables financing fills the bill.

How it works

As a business owner, you could sell some or all of your monthly invoices to a factoring company, and receive immediate cash, based on the value of those invoices. Depending on which alternative lender you work with, you might receive somewhere around 80% of the face value of your invoices, with the other 20% held back until the factor is paid by your customers. When your customers do pay, the factoring company will subtract its fee and remit the balance of the unpaid invoice amounts to you. 

Advantages of accounts receivable financing 

The first big advantage of receivables financing is that the whole process can be concluded in less than a week, especially if you have worked with the same factor before. No traditional lender could be that flexible, and that’s why this method is perfect for solving temporary cash flow issues.

It’s not necessary for your company to have extensive credit history, or particularly good credit history either, to be approved for accounts receivable financing. It will matter more to a factoring company that your customers pay their invoices promptly, since that is where the factor’s money will come from. In other words, it’s much easier to qualify for receivables financing than it is for traditional loans.

Since this is not a loan, you never have anything to pay back. Once you sell the invoices to a factor, you don’t have anything further to do with them, and that means your company personnel won’t have to be involved with collections, or with repeatedly contacting slow-paying customers. Instead, employees can focus on more important aspects of your business.


For assistance on financing your receivables, contact SkyBridge Capital today!