Menu
Summary: Key Takeaways about Accounts Receivable Financing Companies
- AR Financing vs. Factoring: AR financing uses invoices as collateral for cash advances, keeping customer relationships intact, while AR factoring involves selling invoices to a factoring company, which collects directly from customers.
- Benefits of AR Financing: Provides quick cash flow for payroll, operational costs, growth opportunities, and seasonal fluctuations without taking on debt or selling equity.
- Selection Criteria for AR Financing Companies: Look for high advance rates (95%-100%), a positive reputation, high funding limits, fast funding times, no hidden fees, and tech-powered efficiency.
- Comparison Top AR Financing Companies: See a breakdown of pros, cons, pricing, limits, and more for FundThrough, altLINE, Scale Funding, JD Factors, and Porter Capital.
Finding the right financing partner is difficult: we understand as entrepreneurs and a small business ourselves! This guide will walk you through a comprehensive comparison of several strong AR financing company options, and we’ll share our experience and expertise on how to make the best choice for your business.
What’s the Difference Between Accounts Receivable Financing and Accounts Receivable Factoring?
Depending on the factoring company, AR financing and AR factoring can be two different services or they can both refer to the same thing: selling your accounts receivable for a cash advance. Let’s also break down the differences in these terms when they refer to different ways of funding your business.
AR Financing | AR Factoring | |
Definition | The business advances cash against their AR as needed and repays the balance themselves on a pre-determined schedule. | The business gets a lump sum of capital for selling its AR to a factoring company. The business’ customer pays their invoice to settle the balance. |
Pros | No customer contact Can be faster Can be more flexible, depending on the factoring company | Higher funding limits Time savings w/AR management No debt |
Cons | Requires managing payments and AR Adds debt to balance sheet | Reputation concerns with customer contact Can be difficult to record in accounting |
Client use cases | I use AR financing when… “I only need a small amount of money; it’s quick.” “My customer doesn’t accept factoring agreements” “My invoices are smaller” | I use AR factoring when… “My business and invoices are growing” “I don’t want to worry about collections” “I don’t want to worry about having enough money in my account for repayments” |
Why Get Invoices Paid Early with AR Financing Companies?
- Why wait 30, 60, or even 90 business days for customer payments when accounts receivable financing companies can expedite this process? This approach not only bridges cash flow gaps but also circumvents the need for traditional loans, which often entail rigorous credit checks and collateral.
Having immediate access to funds can transform the way you manage and grow your business. Here are some critical use cases for accounts receivable financing:
- Meeting Payroll Obligations: Ensuring your team is paid on time is crucial for maintaining morale and operational stability. Early invoice payments mean you never have to delay payroll due to slow-paying customers.
- Seizing Growth Opportunities: With readily available cash, you can invest in growth initiatives, such as expanding your product line, entering new markets, or increasing your marketing efforts, without waiting for customer payments.
- Covering Basic Overhead Expenses: From rent and utilities to software subscriptions, having your invoices paid early ensures you can cover your day-to-day operational costs without a hitch.
- Getting Funded in Tight Credit Markets: When banks tighten lending requirements, many SMBs get rejected-even if they’re high-performing.
- Seasonal cash flow fluctuations: Get a float during the slow season and get growth capital during the busy season to take on projects without financial roadblocks.
- Avoid debt and dilution: Because accounts receivable financing is secured by the invoice, it’s not debt. It also lets you stay in control of your company if you’re not ready to sell equity.
- Purchasing Inventory or Supplies: For businesses that rely on inventory, immediate invoice payment allows for timely restocking, preventing stockouts and lost sales.
- Investing in Equipment or Technology: Access to funds enables investments in new equipment or technology, improving efficiency and potentially offering a competitive edge in your market.
- Managing Seasonal Fluctuations: Businesses that experience seasonal peaks can use invoice financing to stabilize their cash flow throughout the year, ensuring they can meet increased demand during peak seasons.
- Emergency Fund: Immediate access to funds can serve as a financial buffer for unexpected expenses, such as emergency repairs or unforeseen operational challenges.
- Debt Reduction: Using invoice financing can help pay down existing debts quicker, reducing interest costs and improving your balance sheet.
- Vendor Discounts: With cash on hand, you can take advantage of early payment discounts from suppliers, reducing your cost of goods sold.
- Strategic Hiring: When you need to expand your team to support growth or replace departing employees quickly, having funds on hand means you can move swiftly to secure top talent.
By leveraging accounts receivable financing, companies can maintain steady cash flow, ensuring they’re well-positioned to manage and grow their business effectively, without being at the mercy of their customers’ payment timelines.
See if you're pre-qualified
How We Chose the Best Accounts Receivable Factoring Companies
Ideally, you should look for a partner who understands your business and can help maintain your cash flow for the long term. That was our philosophy for choosing the main criteria we looked at. Specificially, we compared:
- Funding limit: To determine if the company can accommodate a wide range of needs, whether it’s a single large invoice or ongoing growth.
- Advance rate: The amount of the invoice you receive upfront impacts how beneficial AR financing will be for your cash flow. (The remaining balance less fees is remitted once your customer pays.) Typically it’s 80–95%. Some companies, like FundThrough, offer 100%.
- Rates & Factoring fees: In addition to rates, we searched for hidden fees like service, application, or termination charges that can inflate the total cost, fast.
- Level of commitment: Whether the company requires long-term contracts and minimum funding volume impacts how flexible and helpful the solution really is.
- Funding speed: Are they taking advantage of the efficiencies of AI and automation? That will make your funding experience quicker and easier. All the options we included can provide funding within 24 hours (upon approval).
- Reputation: Reviews give you an glimpse into your overall experience from other clients, but they can also give you an authoritative opinion from an expert–like this best invoice factoring companies ranking by Forbes Advisor.
Ready get your invoices paid in days?
5 Best Accounts Receivable Financing Companies
If you’re serious about exploring accounts receivable financing, you’ll notice that there are many factoring companies offering this service. Some invoice financing companies have better reputations than others, so it’s important to do your research before deciding who to partner with for selling accounts receivable. We did your homework for you with this comparison of 5 accounts receivable financing companies:
1. FundThrough
FundThrough is an accounts receivable financing company, offering businesses an innovative and flexible solution to bridge cash flow gaps created by long payment terms with a tech-powered approach. Our platform, fueled by AI, simplifies the funding process, allowing for rapid access to capital. Recognizing the challenges of extended net terms, FundThrough provides a way for you to grow your business or manage everyday expenses by getting invoices paid early, bypassing the lengthy approval processes often encountered with traditional banking solutions. We serve businesses across the U.S. and Canada. (If you’re looking for factoring elsewhere, see our pages on Texas invoice factoring, Houston factoring companies, and Columbus factoring companies.)
Pros |
|
Cons |
|
Invoice Financing rates & fees | 2.75% per 30 day terms; no hidden fees |
Funding limits | Unlimited, for as much as you have in eligible invoices |
Industries served | Most industries, including oil and gas, manufacturing, technology, staffing, B2B wholesale and retail, trucking and transportation, professional services, building supplies, and more |
Geographies served | US and Canada |
How to get started | See if you’re pre-qualified in minutes |
- Positive Reputation: FundThrough has 4.6 stars on Google from happy clients across 183 reviews.
- Industry recognition: FundThrough has been named the best overall factoring company of 2025 by Forbes Advisor, and a top factoring company by multiple independent reviews, like Nerdwallet and FitSmallBusiness.
- Professional Relationships with Your Customers: We always treat your customers professionally, and we don’t contact them without contacting you first. Here’s how we work with your customers.
Get your invoices paid early with FundThrough
2. altLINE
altLINE brings the security and reliability of bank-based financing with the flexibility of AR financing. Offering competitive rates and transparency, altLINE stands out for its straightforward approval process and lack of intermediaries, ensuring lower costs and efficient funding solutions. With altLINE, businesses benefit from direct bank funding, FDIC insurance, and the possibility of transitioning to traditional bank loans, making it an attractive option for many.
Pros |
|
Cons |
|
Invoice Financing rates & fees |
|
Funding limits |
|
Industries served | Staffing, distribution, freight, manufacturing, wholesale, janitorial, energy, and more |
Geographies served | US |
How to get started |
3. Scale Funding
With over two decades of industry experience, Scale Funding (formerly TCI Business Capital) offers specialized invoice factoring and accounts receivable financing services tailored to the unique needs of businesses across various sectors. Known for its rapid funding solutions, transparent pricing, and dedicated support, Scale empowers businesses with the financial agility required to manage operations smoothly and capitalize on growth opportunities.
Pros |
|
Cons |
|
Invoice Financing rates & fees | Unavailable |
Funding limits | Up to $30M |
Industries served | Trucking, staffing, telecom, oil and gas, manufacturing, consulting, commercial cleaning, and more |
Geographies served | US |
How to get started |
4. JD Factors
With over three decades of experience, JD Factors is a leader in non-recourse receivables factoring, offering unwavering support and customer service. Catering to a diverse range of industries including manufacturing, staffing, oil and gas, and trucking, JD Factors tailors its services to meet the unique needs of each business. Known for its flexibility and transparent pricing, JD Factors ensures businesses can access the funding they need without the worry of recourse.
Pros |
|
Cons |
|
Invoice Financing rates & fees | Starts at 2% per invoice |
Funding limits | $25K-$2M |
Industries served | Trucking and transportation, staffing, wholesale and distribution, oil and gas, IT, telecommunications, professional services |
Geographies served | US and Canada |
How to get started |
5. Porter Capital
Porter Capital is a reputable alternative financing company that offers a range of services designed to enhance business cash flow and support growth. Among their offerings, accounts receivable financing stands out as a pivotal solution. This service enables businesses to receive immediate funds for outstanding invoices, effectively converting receivables into working capital without waiting the typical 30 to 120 days for customer payments.
Pros |
|
Cons |
|
Invoice Financing rates & fees | 1%-2% of amount borrowed |
Funding limits | $25K-$25M |
Industries served | Trucking and transportation, staffing, manufacturing, distribution, oil and gas, IT, consumer packaged good, professional services |
Geographies served | US |
How to get started |
Ready get your invoices paid in days?
Industries that Achieve Their Goals with Accounts Receivable Financing
- Oilfield services. Companies that serve large energy companies can assure their client that they are well-capitalized to complete the work and get immediate cash flow to cover operational costs like equipment maintenance.
- Staffing. Staffing firms benefit from accounts receivable financing by accessing funds to pay employees promptly while waiting for client payments, ensuring smooth operations and the ability to scale quickly.
- Information technology. IT companies use accounts receivable financing to maintain cash flow for investing in research, development, or scaling services while waiting on extended payment terms from clients.
- Wholesale. For wholesalers, accounts receivable financing enables bulk purchasing and inventory restocking by bridging the gap between product sales and customer payments.
- Manufacturing. Manufacturers rely on accounts receivable financing to manage production costs, purchase raw materials, and meet delivery deadlines while awaiting client payments.
- Professional services. Service providers use accounts receivable financing to cover operational expenses like salaries and overhead costs, ensuring consistent service delivery despite slow client payments.
We also serve these industries-and many more!
- Medical invoice factoring
- Transportation invoice factoring
- Freight invoice factoring
- Trucking invoice factoring
- Export invoice factoring
- Engineering invoice factoring
- Apparel invoice factoring
- Security invoice factoring
- Waste management invoice factoring
- Automotive invoice factoring
- Janitorial invoice factoring
- Education invoice factoring
- Agriculture invoice factoring
- Hospitality invoice factoring
- Commercial invoice factoring
FAQ
How does accounts receivable financing work?
The process is straightforward: businesses submit their unpaid invoices to a financing company, which then conducts a swift application process. Once approved, these companies provide a cash advance against the invoices, typically within a few business days, charging a factoring fee for the service. This solution is particularly beneficial for businesses facing slow-paying customers, enabling them to sustain and grow without the wait. Here’s how it works at FundThrough:
- Connect or Create Your Account: Start by setting up your FundThrough account or connecting your existing accounting software like QuickBooks or OpenInvoice.
- Select Invoices to Fund: Choose which outstanding invoices you’d like to advance. We will then work with you to verify your customer and invoices.
- Receive Funding: Upon approval, the cash advance (often 100% the value of the invoice, minus an upfront, transparent fee) is deposited into your bank account, typically within days.
- Get back to business. Your customer makes their payment directly to FundThrough—so you can get back to business without chasing down payment.
How do I qualify with accounts receivable financing companies?
Qualification depends more on the creditworthiness of your customers, rather than your business’s credit score, making it an accessible financial solution for many.
At FundThrough, the qualification process is designed with your business needs in mind. Here’s what we look for to determine if you’re a good fit:
- Your business should have an outstanding invoice of at least $100K in accounts receivable, or invoices to one customer that add up to $100K.
- We cater to businesses that invoice other businesses (B2B) or government agencies in the U.S. or Canada
- Invoices should be for completed work, with an expected due date set. It’s important to note that we do not finance invoices in construction or real estate.
- There should be no explicit liens on receivables that you aren’t willing to have removed
Depending on the specifics of your business and your customers, we may request additional information to thoroughly verify your business and ensure a smooth funding process.
How much does receivables financing cost?
Receivables financing costs typically range from 0.25% to 5% of the invoice value, depending on factors like creditworthiness, funding type, and financing duration. Factoring rates may also include service fees or interest charges, increasing overall costs.
What’s an example of accounts receivable financing?
An example of accounts receivable financing is invoice factoring. Let’s say Acme sells its unpaid invoices to a factoring company at a discount. Acme receives immediate cash, while the factoring company collects payments directly from it’s customer, Initech, when the invoice is due.