Borrow against your invoices without selling them
Accounts receivable financing turns money your customers already owe you into working capital while the receivable stays yours. It is the borrowing side of invoice-based funding — the side that is not factoring — and the difference between the two decides who collects, what your customer sees, and whether it lands on your balance sheet as debt.
Availability and structure vary by participating provider. Some facilities leave collection entirely with you; others direct payment to a controlled account. Confirm which before you sign.
What accounts receivable financing actually is
Accounts receivable financing is business borrowing where your unpaid invoices are the security. You have delivered the work, you have issued the invoice, and the customer will pay in thirty, sixty or ninety days. Rather than waiting, you draw against the value of those receivables now and repay as they are collected. The invoice is not sold. It remains an asset of your business, and the financing sits against it.
That is the whole idea, and it is worth stating plainly because the vocabulary around it is unusually loose. “Invoice financing” and “accounts receivable financing” generally mean the same thing. “AR financing” is the same again, abbreviated. And “accounts receivable financing” is sometimes used loosely by providers as an umbrella covering both borrowing and factoring — which is exactly why the useful question is never what is this called but am I borrowing against this invoice, or selling it?
The financing exists because of a specific and very common mismatch: a business that invoices on terms is, in effect, lending its own money to its customers for the length of those terms. Payroll runs weekly, suppliers want paying in thirty days, and the receivable that funds both of them arrives in sixty. Growth makes this worse rather than better, because every new order widens the gap before it closes it. Receivables financing is a way of compressing that gap using an asset the business already owns.
If you keep the invoice and borrow against it, that is accounts receivable financing. If you sell the invoice to someone who then owns and usually collects it, that is factoring. Everything else on this page follows from that single distinction.
Accounts receivable financing is not invoice factoring
These two are routinely presented as synonyms, including by providers who offer only one of them. They are not. They use the same asset and answer the same cash-flow problem, and then they differ on almost every term that a business owner actually cares about: who owns the receivable, who talks to your customer, whether the arrangement shows up as debt, and what happens if the customer never pays.
Accounts receivable financing
You borrow. The invoice secures the financing and stays yours.
- The invoice: you keep it
- Who collects: often still you, depending on the facility
- Your customer: may never need to be involved
- On your books: debt
- Underwriting weight: your business and your customers
- If the customer never pays: the borrowing is still yours to repay
Invoice factoring
You sell. The factor buys the receivable and usually collects it.
- The invoice: you sell it
- Who collects: the factor, under most agreements
- Your customer: usually notified
- On your books: not debt — it is a sale
- Underwriting weight: mostly your customers’ credit
- If the customer never pays: depends on recourse or non-recourse
| AR financing | Invoice factoring | |
|---|---|---|
| What happens to the invoice | Pledged as collateral | Sold and assigned |
| Customer relationship | Often stays with you | Usually passes to the factor |
| Customer notification | Not always required | Usual practice |
| Balance-sheet treatment | A liability | Not debt — a sale of an asset |
| What is priced | Interest and facility fees on what you draw | A discount on the invoice’s face value |
| Published Fundur range | Set by the participating provider | Factoring fee commonly about 1%–4% per 30 days, advance commonly 80%–90% |
| Bad-debt risk | Stays with you — you borrowed | Recourse or non-recourse, per the agreement |
| Best when | You want the customer relationship untouched | You want collections handed off entirely |
Fundur publishes the factoring figures above because they are Fundur’s own published ranges on the invoice factoring page. No equivalent universal range is published for receivables borrowing, because advance rates, pricing and structure are set facility by facility by the participating provider.
How borrowing against receivables actually works
Two shapes are common, and they are not the same. A one-off advance is taken against a specific invoice or a small group of them and repaid when they are collected. A revolving receivables facility sets a limit that moves with your receivables ledger: as you invoice, your capacity rises; as customers pay, it falls and refreshes. The second is the one that suits a business whose whole model is invoicing on terms, because it tracks the ledger rather than a single transaction.
You invoice as usual
Work is delivered, the invoice is issued on your normal terms, and it becomes a receivable in your ledger.
Receivables are reviewed
The provider looks at the ledger: who owes you, how much, how old the balances are, and how reliably those customers pay.
A capacity is set
Eligible receivables are converted into an available amount using an advance rate the provider sets. This is the borrowing base.
You draw what you need
You take funds against that capacity — not necessarily all of it — and pay for what you draw.
Collection repays the draw
As customers pay, the facility is repaid and capacity is restored. Where you still collect, the customer experience is unchanged.
The borrowing base, in plain terms
This is why two businesses with identical revenue can be offered very different capacity. It is not the size of the ledger that decides it, but how much of the ledger survives the eligibility test — which is largely a statement about your customers, not about you.
Which receivables count, and which quietly do not
The single most useful thing to understand before applying is that a receivables facility is underwritten substantially on the people who owe you money. Your ledger is the collateral, so its composition matters more than almost anything on your own profit and loss.
Usually eligible
- Business-to-business invoices for work already delivered and accepted
- Invoices to government and public-sector customers, subject to assignment rules
- Balances within the provider’s stated age limit and current on terms
- Customers with a payment history and reasonable credit standing
- A spread of customers rather than one dominant account
Usually excluded or discounted
- Invoices for work not yet performed — that is a different problem, and often purchase order financing
- Consumer receivables and cash-on-delivery sales
- Disputed, credited or partially delivered invoices
- Balances aged past the provider’s cut-off
- Intercompany, related-party and contra accounts
- Receivables already pledged under an existing lien
If one customer is most of your ledger, the provider is being asked to take a view on that one company rather than on a diversified book. Most set a concentration cap, and the amount above it is stripped out of the borrowing base before the advance rate is even applied. A business with strong revenue and a single dominant customer can be offered materially less than its revenue suggests — and it is better to know that before applying than after.
When borrowing against receivables is the right instrument
It usually fits when
- You invoice other businesses on terms and the wait is the problem, not the demand
- The customer relationship is commercially important and you do not want a third party inside it
- Growth is the cause of the squeeze — more orders means more money tied up in the ledger
- The gap is structural and repeating, so a facility that refreshes beats a one-off loan
- Your customers pay reliably, even if they pay slowly
It usually does not fit when
- You have no receivables ledger — retail, hospitality and card-based businesses should look at a Working Capital Loan or a line of credit
- The shortfall is a loss rather than a timing difference; financing a loss makes it larger
- You would rather hand collections off entirely — that is factoring
- The money is needed before the work is done, to pay a supplier against an order
- Your ledger is a single customer and the concentration cap would eliminate most of it
What drives the price, and what to check before signing
Receivables borrowing is priced on risk that mostly sits outside your own business, which makes it behave differently from a term loan. Fundur does not publish a universal rate for it, because there is not one: the participating provider sets pricing against your ledger. What can be described honestly is what moves that price, and where the costs hide.
Who your customers are
Their credit standing and payment record are the main input. A ledger of slow-but-solid national accounts prices differently from one of small, thinly-documented buyers.
How fast they pay
Cost is usually a function of time outstanding. Net-30 that behaves like net-30 is cheaper to finance than net-30 that behaves like net-75.
Concentration and spread
A diversified ledger reduces the provider’s exposure to any single failure, and that is reflected in both the advance rate and the price.
Facility size and usage
Larger, more actively used facilities are generally priced more finely than small occasional advances. Some facilities carry fees on the unused portion.
The headline rate is not the whole cost
Ask for the all-in figure including any facility, servicing, audit, wire, minimum-usage or unused-line fees. A low headline rate with a monthly minimum can cost more than a higher one without.
Your lien position
A receivables facility needs a first lien over the receivables. If an existing lender holds a blanket lien, it must subordinate or release. Confirm this early — it is the most common reason a receivables deal stalls.
Because this is borrowing rather than a sale, non-payment by your customer does not extinguish your obligation. If an invoice goes bad, the receivable comes out of the borrowing base, capacity falls, and the amount drawn against it still has to be repaid. That is the trade you are making in exchange for keeping the invoice and the customer relationship, and it is the reason the eligibility rules above are worth reading carefully rather than skimming.
Receivables financing against the structures it is confused with
Invoice-based funding is one point on a timeline. What separates these four is when in the order-to-cash cycle the money arrives, and that single question usually settles which one you actually need.
| Structure | Point in the cycle | Secured by / sized to | Answers |
|---|---|---|---|
| Purchase order financing | Before you fulfil the order | A confirmed customer purchase order | “I have the order and cannot pay the supplier.” |
| Inventory financing | While goods sit in stock | Inventory you hold | “My cash is on the shelf.” |
| Accounts receivable financing | After you invoice | Unpaid invoices, pledged | “The work is done and I am waiting to be paid.” |
| Invoice factoring | After you invoice | Unpaid invoices, sold | “I am waiting to be paid and I want collections handled.” |
| Business line of credit | Any time | General business strength | “I want revolving capacity that is not tied to invoices.” |
| Working Capital Loan | Any time | Revenue and trading history | “I want a lump sum and fixed payments.” |
Invoice factoring
Sell the invoice, hand off the chasing, and accept that your customer is usually notified. The fee structure and advance rates are published in full.
Invoice factoringPurchase order financing
Where the constraint is paying a supplier against an order you have already won, the receivable does not exist yet and this is the earlier instrument.
Purchase order financingFreight factoring
Trucking has its own version, with its own advance rates, fuel-advance conventions and broker credit checks.
Freight factoringHow receivables financing is arranged through Fundur
Fundur is a financing marketplace, not a lender and not a factor. Receivables-based structures are available through participating financing providers in the network, and the honest position is that the right structure is not obvious from the outside: the same ledger can point to borrowing for one business and to factoring for another, depending on customer concentration, existing liens and how much the business wants its customers left alone.
- What decides it is the ledger, not the labelWho owes you, how much, how old and how reliably they pay. An accounts receivable ageing report is the single most useful document you can have ready.
- Existing liens are checked firstIf another lender holds a blanket lien over your assets, that has to be resolved before a receivables facility can be secured properly.
- Availability varies by providerNot every applicant will have a receivables provider available, and structures differ between them. Nothing on this page is an offer or a guarantee of a specific facility.
- A personal guarantee is generally expectedThere is no standard no-personal-guarantee product across the network.
- Checking is a soft inquirySeeing your options through Fundur does not affect your credit score.
Nothing on this page is a quote, an offer of credit, or a commitment to fund. Advance rates, pricing, eligibility rules, notification practice and collection arrangements are set by the participating financing provider, differ between providers, and are confirmed in the facility documents you receive — not here.
Accounts receivable financing FAQs
What is the difference between accounts receivable financing and invoice factoring?
With accounts receivable financing you borrow against your invoices. The receivables secure the financing, you keep ownership of them, and depending on how the facility is structured you may go on invoicing and collecting from your customer yourself. It is debt, and it appears on your balance sheet as debt.
With invoice factoring you sell the invoice. The factor buys the receivable, and under most factoring agreements the factor collects from your customer directly and your customer is notified. Because it is a sale rather than a loan, it does not add debt.
They are related, not interchangeable. Which one a provider offers, and how servicing and collections are handled, varies by provider and by the structure of the specific facility.
Is accounts receivable financing the same as invoice financing?
In everyday use, yes — “invoice financing” and “accounts receivable financing” usually describe the same idea: borrowing against unpaid invoices rather than selling them. Some providers use “accounts receivable financing” as an umbrella term that covers both borrowing and factoring, so the words on a term sheet matter less than one question: am I borrowing against this invoice, or selling it? Ask that directly.
Whose credit matters more, mine or my customer’s?
Both, and the balance depends on the structure. The receivable is the collateral, so the credit quality, payment history and concentration of the customers who owe you carry real weight — a provider is asking whether those invoices will be paid. But because AR financing is borrowing rather than a sale, your own business and its obligations are also underwritten in a way they are not in a pure factoring decision. Requirements are set by the participating provider, not by Fundur.
Will my customers know?
It depends on the facility. Borrowing against receivables is often arranged so that you continue to invoice and collect, which keeps the arrangement between you and the provider. Some facilities are structured with notification or with payments directed to a controlled account, particularly as facility sizes grow. This is one of the first things to confirm in writing, because it is the point on which the two structures are most often mis-sold as identical.
What kind of invoices can be financed?
Business-to-business and business-to-government receivables for work already delivered or completed, invoiced on normal commercial terms, undisputed, and owed by a creditworthy customer. Receivables that are already pledged to another lender, invoices for work not yet performed, consumer receivables, and heavily disputed or long-overdue balances are the usual exclusions. Eligibility is set by the provider.
Does it require a personal guarantee?
Assume yes. A personal guarantee is generally expected across Fundur’s network, and there is no standard no-personal-guarantee product. See unsecured business loans for what “unsecured” does and does not mean, and business loan collateral for how a lien over receivables sits alongside other security.
Can I use AR financing and a line of credit at the same time?
Sometimes, but not automatically. A receivables facility is normally secured by a lien over your accounts receivable, and an existing lender may already hold that collateral or a blanket lien. Where that is the case the existing lender has to release or subordinate its claim before a new facility can be put in place. That negotiation, not the financing itself, is often what decides whether the deal happens. UCC liens explains the mechanics.
Is accounts receivable financing available through Fundur?
Fundur is a financing marketplace, not a lender. Receivables-based structures are available through participating financing providers in Fundur’s network, and which structure fits — borrowing against invoices, factoring, or something else entirely — depends on your customers, your invoicing, your existing obligations and the provider’s own underwriting. Availability varies. Checking your options is a soft inquiry and will not affect your credit score.
Tell us who owes you, and how long they take
That is the part that decides the structure. One short application, and you can compare what participating providers in Fundur’s network can do with your receivables.