Accounts Receivable Financing by Tom Markel

Accounts receivable financing--also known as accounts receivable factoring--is a way for small businesses to obtain fast working capital without the need for a loan or repayment. A company's accounts receivable--invoices sent to clients for goods, or services rendered--are listed on a balance sheet as an asset. The small business can then sell these invoices to a larger company, which then takes on the risks of collecting the money owed by clients and provides the small business with immediate funds.

A small business will usually be required to "age" its invoices before receiving accounts receivable financing. For accounts less than 30 days old, a provider may pay around 75 percent of the value of the invoice. But for accounts that have been outstanding for a longer amount of time, the provider will typically pay less. Some providers are unwilling to take on accounts that have been outstanding for longer than 90 days.

Accounts Receivable Financing (Factoring) can be obtained using iBank's free online application process. A business can custom-create its own package, compare offers, negotiate with providers directly, and ultimately choose the company that best meets its needs. And the entire process is completed online via iBank.com's Digital Loan Center.

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