Accounts Receivable Financing
$5,000 – $1,000,000
Account Receivable financing is a method used by businesses to convert contracted sales on credit terms. This financing is for immediate cash flow and occasional working capital. The lender uses one or multiple outstanding receivables as collateral for the loan. Accounts receivable financing can be disbursed as a lump sum or put on a line of credit based on a percentage of the outstanding receivable amount.
The amount received from an accounts receivable financing loan will be less than the total value of the invoices that the small business puts up as collateral. Values are assigned to each invoice based on a percentage of the invoice amount, and the aging of the outstanding invoice. The repayment period for accounts receivable financing is generally shorter than for most other loans. Since payments are made as invoices are collected, most loans will be paid off once all the invoices have been paid.