Home » Loans » Business » Accounts Receivable Financing

How to Get Accounts Receivable Financing

What it is

Accounts receivable financing is when a business sells outstanding invoices or receivables at a discount to a finance or factoring company. This finance or factoring company assumes the risk and provides cash to your business during a time of short cash flow. The amount of money paid to the business varies based upon the age of the invoices or receivables. A more current item will pay more, while a less current item will pay less. Any accounts receivable that are older than 90 days are usually not financed.

Accounts receivable financing comes with a lot of benefits, but a small business will pay for this service. Applicable discount fees and other charges can become quite costly over the course of a year, and are often more expensive than the interest on a more traditional bank credit or loan. Accounts receivable financing should only be used as a way to buy time until a credit line can be arranged. Rates will vary among companies. The two main benefits of accounts receivable financing are these: firstly, your accounts receivable management has been outsourced, freeing up resources and working capital for your business; secondly, this financing provides you with quick cash.

Who it's for

Accounts receivable financing is great for businesses that need immediate cash flow for survival. It is a good option for businesses that have exhausted all other means of financing. In order to make accounts receivable financing successful, a business should be prepared for an infusion of cash or expansion and should be aware of market trends and changes that could affect any new financing.

What you need to do to apply

To apply for accounts receivable financing, you will need some very basic information about your small business, including the yearly gross sales. Those considering a factoring or finance company should spend time investigating any available companies. The factoring business is not as regulated as the banking industry and it is necessary to inspect contracts and negotiate discount rates to avoid getting a bad deal.

Apply for Accounts Receivable Financing

Click here to apply for a business loan at PlanetLoan:

Loan Search Engine

Popular Credit Cards

Recommended Credit Card

The Platinum Card® from American Express

The The Platinum Card® from American Express is one of the most popular cards available. Your Credit Advisor recommends it as our favorite in this category.

The Platinum Card® from American Express

Apply for The Platinum Card® from American Express
  • Earn 25,000 Membership Rewards? bonus points when you spend $1,000 in your first 3 months of Card membership - redeemable for one domestic round-trip Coach-Class airline ticket!
  • Airport Club Access: Access airport lounges around the world, compliments of Airport Club Access Program.
  • 24-Hour Concierge Service: From buying gifts to making reservations, the Platinum Card? Concierge is at your service so you can spend your energy doing what you want.
  • FINE HOTELS & RESORTS: Receive special amenities and comforts when staying at more than 600 boutique, resort and luxury hotels around the world.
  • Apply online now at American Express's Web site.
Intro APR Regular APR Credit Needed Annual Fee
No Introductory Rate Available No APR Very Good $450

Citi® Platinum Select® MasterCard®

Citi® Platinum Select® MasterCard®

Apply for Citi® Platinum Select® MasterCard®
  • 0% Intro APR on balance transfers for 18 months and 0% Intro APR on purchases for 12 months. After that, the APR will be 11.99%-19.99% based upon your creditworthiness. This APR will vary with the market based on the Prime Rate*
  • Extra Cash from Citi: enjoy discounts on gift cards, travel, merchandise and more
  • Citi® Identity Theft Solutions
  • Secure, free online account management
  • No annual fee*
  • Read our review or apply online now at Citibank's Web site.
Intro APR Regular APR Credit Needed Annual Fee
0% Intro APR* 11.99% - 19.99%* (Variable) Very Good $0*

Starwood Preferred Guest® Credit Card from American Express

Starwood Preferred Guest® Credit Card from American Express

Apply for Starwood Preferred Guest® Credit Card from American Express
  • Earn up to 25,000 Starpoints (R) - enough for up to 6 free nights at a category 1 or 2 hotel
  • Use Starpoints(R) for free nights and upgrades at participating Starwood hotels and resorts in 95 countries including Sheraton, W Hotels, Westin and more with no blackout dates
  • No annual fee for the first year and $45 thereafter
  • Transfer Starpoints(R) - almost always on a 1:1 basis - to the frequent flyer programs of over 30 major airlines
  • Earn one Starpoint(R) for every dollar you spend and double Starpoints(R) at participating Starwood properties and retail partners
  • Express Approval. Get a decision in less than 60 seconds
  • Smarter Travel Editor's Choice Award for Best Travel Awards Card for Domestic Use
  • Read our review or apply online now at American Express's Web site.
Intro APR Regular APR Credit Needed Annual Fee
2.90% on Purchases and Balance Transfers for 6 months 15.24% variable Very Good $45**

IberiaBank Visa® Classic Card

IberiaBank Visa® Classic Card

Apply for IberiaBank Visa® Classic Card
  • No Annual Membership Fee
  • Low variable rate of 7.25%, 10.25%, or 13.25% (Prime + 4.00%, Prime + 7.00%, or Prime + 10.00%) as of 4/1/10 based on the creditworthiness. This APR will vary with the market based on the Prime Rate. (If there is an interest charge, the charge will be no less than $1.00).
  • Low Introductory APR on balance transfers of 1.99% for your first 6 billing cycles, this rate will not change during the introductory period. Applies to balance transfers processed within three months of your account open date. After that, your APR will be the same as your assigned purchase rate, based on your creditworthiness.
  • Online Access to Credit Card Account Information
  • Apply online now at the card issuer's Web site.
Intro APR Regular APR Credit Needed Annual Fee
1.99% APR for 6 Months 7.25%, 10.25%, or 13.25%* None $0

American Express® Gold Card

American Express® Gold Card

Apply for American Express® Gold Card
  • Earn 10,000 Membership Rewards(R) bonus points when you spend $500 in 3 months - redeemable for a $100 gift card!
  • The Membership Rewards program - Turn your everyday purchases into Membership Rewards points, and then redeem them for an amazing collection of travel, shopping, dining and entertainment rewards.
  • Gold Card Events - exclusive access to tickets for select concerts, shows, major sporting events, and more in cities nationwide.
  • Express Approval. Get a decision in less than 60 seconds.
  • Read our review or apply online now at American Express's Web site.
Intro APR Regular APR Credit Needed Annual Fee
No Introductory Rate Available No APR Good $125