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What is Accounts Receivable Financing?

Accounts receivable financing is a working capital financing tool that is also referred to as:

  • receivables financing or A/R financing
  • accounts receivable factoring (or receivables factoring)
  • invoice factoring or receivables invoice factoring
  • spot factoring or microfactoring

If you thought you had to wait on customer payments for working capital, good news. Accounts receivable financing enables you to unlock the working capital tied up in unpaid customer invoices on the same day the invoice is generated.

Fast, Secure and Easy

Here’s how the accounts receivable financing process works:

1. APPLY

Apply for accounts receivable financing to unlock working capital tied up in unpaid receivables.

2. FACTOR INVOICES

Go from approval to your first funding in as little as 24-48 hours — or even faster; factor only when you choose.

3. SPEED UP CASH FLOW

Turn expedited cash flow into growth and competitive advantages.

Accounts Receivable Financing Calculator

An accounts receivable financing calculator (also known as an invoice factoring calculator or opportunity cost calculator) enables you to see how much working capital you could unlock using A/R receivables financing, instead of waiting for a customer to pay. Our calculator is designed to show these numbers at an individual invoice level, based on your average invoice amount.

For instance, let’s say that your customer invoices range anywhere from $25,000 – $250,000, but come in on average around $140,000. Enter $140,000 into the A/R financing calculator and you’ll see that (assuming an advance rate of 98% and 1% factoring fee):

  • Receivables financing provides immediate access to $137,200 of the invoice amount
  • The financing company earns a $1,400 financing fee
  • $1,400 placed in reserve to be returned to you when the customer remits payment in full

You can experiment with your own average invoice amount in the form here, or enter your total outstanding accounts receivable amount to see how much working capital you may be able to unlock immediately using receivables financing. Then request a completely free, no-obligation quote and we’ll source receivables financing proposals on your behalf with no application or due diligence fees.

Invoice Factoring Calculator, A.K.A. Receivables Financing Calculator

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How It Works

Essentially, accounts receivable financing is the practice of selling unpaid customer invoices to a receivables financing company (also called a factoring company) as soon as the same day the customer invoice is generated in order to receive an advance on the invoice. The cost of accounts receivables financing is called a factoring fee. A low factoring fee (usually expressed as a small percentage of the invoice amount) is often the all-in cost of unlocking the working capital tied up in unpaid accounts receivable invoices.

Here’s an example of how an accounts receivable financing process might play out assuming a 98 percent advance rate and 1 percent factoring fee

Day One –

  • Generate a customer invoice of 10,000
  • Sell the customer invoice to an accounts receivable financing company
  • Receive an advance of $9,300 (assuming a 93% factoring advance)

Day 30-45-60-90 ++

  • Customer remits payment for the invoice
  • Accounts receivable financing company earns 5% financing fee of $500
  • You receive the $200 amount held in reserve (the invoice amount less advance and factoring fee)

Speed up cash flow using receivables financing instead of waiting 30, 60, 90 days or longer for customers to pay.

Accounts Receivable Factoring Rates

Accounts receivable financing rates refer both to the amount that is advanced to you, as the A/R factoring client, in an advance as well as the amount held in reserve against customer payment of the invoice and the amount earned by the accounts receivable financing company as the financing fee (also called a factoring fee).

As A/R factoring brokers, we view our role as the client’s advocate. Our job is to help our clients find the factoring solution that is best-suited to the unique needs of their organization, which goes beyond low factoring fees and high advances, with terms such as:

  • Factoring fees as low as 5% – ask about volume discounts!
  • Competitive advances as high as 93%
  • Fast funding
  • No contract, short and long-term contract options
  • No factoring minimums
  • No hidden costs
  • No application or due diligence fees
  • Consistent, professional customer service

Even if you’re already factoring, we would be happy to provide you with a free, no-risk quote so you can be sure you have the accounts receivables financing program in place that is best-suited to the needs of your business.