AR-based lines can be priced in a variety of ways. The flexibility in structure can benefit both the business and the Accounts Receivable Finance company by allowing for maximum flexibility in developing a solution that benefits each party. Unfortunately, this same flexibility in pricing can make it difficult for business owners to grasp all-in costs and can make pricing comparisons amongst lenders seemingly impossible.
In addition to an interest component, accounts receivable financing companies may utilize lockbox fees, service fees, processing fees, monitoring fees, transaction fees, unused line fees, and other ancillary charges in order to achieve their desired return.
Wading through all this noise and determining an all-in rate can be painful, but keep in mind the primary drivers in your Accounts Receivable Financing costs include the size of your financing needs and the credit quality of your customer base.
Accounts Receivable Financing Rates Explained >