Accounts Receivable Financing

Direct Private Capital Group, Inc.

Accounts receivable financing is a loan a business gets to collect money owed by customers. The lender pays the business a percentage of the total amount the customers owe, usually done for a period of time. The money can fund other operations, such as inventory purchases or working capital.

Accounts receivable financing is known as “factoring” or “invoice discounting.” The practice has existed since medieval times when merchants would sell their goods on credit for later payment. In modern times, accounts receivable financing is often used to help small businesses obtain short-term cash flow while they wait for payments from customers who have bought goods or services on credit.

The benefits of accounts receivable financing include:

  • You don’t have to sell assets or take out another loan to get funds.
  • You can use the cash immediately without waiting for the end of your fiscal year.
  • You don’t have to worry about selling your invoices at the right time or at market value because the lender buys them at their face value (the amount shown on each invoice).