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What is AR Factoring?

Updated by on Oct 23, 2017 in AR Funding, Business Tools, Non-Recourse Accounts Receivable Factoring

AR Factoring or Accounts Receivable Factoring is the selling of your Invoices to a Factoring Company. It is not a loan like a line of credit from a bank but the sale of an asset (Your Invoices) to a third party Invoice Factoring Company.

Many terms and abbreviations are used to describe the same transaction: AR Factoring, AR Funding, Accounts Receivable Financing, Invoice Factoring, etc. However, they all mean the same thing. Versus waiting 30-60 days to get paid by your creditworthy client, an AR Factoring company will buy your invoice(s), advance you from 75-92% against their face value and pay you the difference less their fees when you client subsequently pays the invoice.

Many AR Factoring companies specialize in certain industry types. Some are trucking, medical or construction only. has expertise in each area and has funded every size and type of company since 1998.

Selling your receivables to an invoice factoring company is simple, 3-step process:

  • You provide your client with goods or services and issue an invoice.
  • You sell the invoice to the factoring company who advances you up to 92% for them. The average advance is 85%.
  • Once your client pays the invoice, the factoring company returns to you your retainage, less a fee.

As opposed to other financing products, accounts receivable factoring is easy to obtain and can be set up in a few days. A critical benefit of AR factoring is that the financing companies make their credit decision based on your client’s credit history. AR factoring is an ideal tool for small and medium-sized businesses who cannot obtain bank financing but have solid paying customers.

Want to talk more about AR Factoring? Call 866-598-4295 or use the fast, safe & secure online-funding application.

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