For many businesses, cash flow isn’t just about profit —it’s about timing. If your company has outstanding invoices but needs working capital now, accounts receivable (AR) financing is the solution. Instead of waiting 30, 60 or even 90 days for payment, you can access cash fast and put it to work immediately.
Accounts receivable financing is a solution that allows your company to sell a percentage of its outstanding invoices in exchange for a fee. You can access capital immediately while minimizing long-term cash flow disruptions.
Many organizations, especially larger ones, have a habit of delaying invoice payments. This means that your business could wait 30 days or more to receive payment. AR financing eliminates this hurdle and gets you the capital needed to thrive.
AR financing and invoice factoring both use your outstanding invoices to obtain cash. The primary difference lies in who controls collections.
Factoring means selling outstanding invoices to a third party. That party will pay you 70% to 90% of the invoice and take responsibility for collecting the money from your customer. This is not a loan. The third party is buying the rights to the AR.
On the other hand, AR financing is a loan or line of credit. Your outstanding invoices serve as collateral, and your business is responsible for collecting payment from customers.
Here are examples of how two different industries can use AR financing:
A boutique winery lands a deal with a national distributor. Its wine is stocked in major retailers, but payments won’t arrive for 60 days. Meanwhile, the winemaker needs to source grapes, pay employees and bottle the next vintage. AR financing allows the winery to seize this growth opportunity without taking on high-interest, unsecured loans or bleeding its cash reserves dry.
Suppose that a staffing agency regularly supplies workers toa major corporation. The agency pays the employees biweekly, but the client business only pays a flat fee every month. The staffing provider could use AR financing to minimize the strain on its cash flow and make payroll while awaiting payment from the client.
Barrington Commercial Capital offers a variety of finance solutions for businesses like yours. From purchase order and trade finance to AR financing, our firm has the solutions necessary to protect your working capital and fuel long-term growth.
Having trouble getting a line of credit from your bank? Barrington Commercial Capital says yes when they say no. Contact us to learn more.
