Accounts Receivable Financing

Businesses can secure a loan utilizing the company’s accounts receivable as collateral, known as factoring. The accounts receivable would be supported by unpaid customer invoices. Since invoices are used as collateral, their collectability will be weighted more than the business’s credit history. 

The cost of factoring is a fee, instead of interest and is calculated based upon the expected collection date of each receivable and the credit quality of the invoiced customer. 

The factoring will allow the company to turn their invoices into cash faster, instead of waiting the 60 days or so for the customer to pay the company. Approval time is usually faster for a factoring line than a traditional commercial loan.