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How to shop for accounts receivable financing
Accounts receivable financing is an asset-based financing model that allows businesses to tap into the capital locked in outstanding invoices. For a fee, accounts receivable financing companies can advance up to 100% of the value of your pending invoices.
Although accounts receivable financing is not a business loan, they are very similar products. They work as secured business loans that use outstanding invoices as collateral. Because the reliability of your customer's invoice, not your business or personal credit, is the basis for the financing, you do not need a great credit history to qualify.
Once you set things up -- and as long as your customers pay on time -- you will not need to make any additional payments to the accounts receivable financing company.
How does accounts receivable financing work?
The main goal of accounts receivables financing is to help small businesses with their cash flow. It can be hard to run a business when you are waiting for large invoices to clear. An accounts receivable company can help you access the money your customers owe earlier so you can pay your workers, buy more inventory, or expand your company.
Accounts receivable finance unlocks working capital by giving businesses the option to sell their invoices to funders and receive early payment. This allows businesses to minimize days sales outstanding (DSO), which is used to determine a company’s average collection period. It also reduces the impact of customers that have longer payment terms.
The list of accounts receivable financing companies below is a great place to start if you want to cash in your outstanding invoices. Use the filters on the left to compare options and find the best deal for you.