Accounts Receivable Financing

What Is Accounts Receivable Financing?

Accounts receivable financing is a way to get an advance on your outstanding invoices instead of waiting for customers to pay. A financing partner advances you a percentage of the invoice value now, then collects from your customer later and sends you the remaining balance (minus fees).

How It Works in Practice

1. You provide goods or services to a creditworthy business or government customer.
2. You issue an invoice with payment terms (for example, Net 30, Net 45, or Net 60).
3. You submit the invoice to the AR financing provider.
4. They advance you a portion of the invoice amount (often 70–90%).
5. Your customer pays the invoice to the financing provider.
6. You receive the remaining balance, minus the agreed-upon fee.

Typical Use Cases

• Covering payroll while you wait on large corporate or government checks.
• Buying materials or inventory for the next project before the last one pays.
• Funding rapid growth when new orders are coming in faster than cash.
• Smoothing out cash flow in industries with long payment cycles.

Industries That Commonly Use AR Financing

Benefits of AR Financing

• Improved cash flow: Turn invoices into cash quickly instead of waiting for due dates.
• Growth without extra debt: Many structures are based on the invoices themselves, not just your balance sheet.
• Flexible funding: As your invoice volume grows, your potential funding line can grow with it.
• Back-office help: Some providers include invoice tracking and collections support.

Is AR Financing a Loan or a Sale?

Depending on the program, AR financing can be structured as a line of credit secured by invoices, or as factoring (a sale of receivables). Fast Finance works with partners that offer both types of solutions and will walk you through the differences so you know exactly how it appears on your books.

Example Scenarios

Scenario 1 – Staffing Company

A staffing firm places employees at a large corporate client on Net 45 terms. Payroll is due every week, but invoices aren’t paid for 45 days. By financing those invoices, the firm gets cash almost immediately, pays staff on time, and continues to take on more placements without cash stress.

Scenario 2 – Manufacturer With a Big PO

A manufacturer wins a large order from a national retailer but needs to buy raw materials upfront. AR financing on the retailer’s invoices provides the working capital to fulfill the order, with the retailer’s credit strength helping support approval.

Scenario 3 – Freight Carrier

A regional carrier invoices brokers on Net 30–45 terms but needs fuel money now. By financing freight invoices, they receive a large portion of the invoice value within a day or two of delivery.

Basic Qualification Guidelines

Each funding partner is different, but AR financing generally works best when:

• Your customers are other businesses or government entities (B2B or B2G).
• Your invoices are for completed, delivered work (not future milestones).
• Invoices are not heavily disputed and have clear terms.
• Your customers have decent credit and payment history.

What You May Need to Provide

• Sample invoices and aging report (who owes you and for how long).
• Customer list and basic information on your largest clients.
• Business bank statements and basic financials.
• Articles of organization and ownership details.
• Voided check and ID for final funding setup.

How Fast Finance Helps

Fast Finance reviews your receivables, customer base, and cash-flow needs, then introduces you to AR financing partners that focus on your industry and invoice size. You get clear proposals that outline:

• Advance rate (percentage of invoice funded upfront).
• Fees and expected cost based on time outstanding.
• Minimums, maximums, and contract terms.
• How collections and customer communication are handled.

Want to see what AR financing could look like for your business? Check my AR financing options