Accounts Receivable Financing
Accounts receivable (AR) financing occurs when a business turns unpaid customer invoices into immediate cash. A business owner might look into AR financing when they need a short-term working capital boost or if they have a slow-paying customer slowing down cash flow.
AR financing is similar to invoice factoring and the terms are sometimes used interchangeably, but there is one difference between the two financing methods. While both have the same end-goal and both provide businesses with a cash advance, AR financing is generally less flexible in that businesses with low credit have a harder time qualifying. Invoice factoring, on the other hand, is a notoriously forgiving financing method in that businesses with subpar credit can typically still qualify.