To grow, businesses need access to working capital. However, this can be difficult if they rely on delayed payments. After all, how can you make solid plans when you won’t get paid for up to 90 days after delivering the goods or services?

Fortunately, there are options that don’t require you to take funds from daily operations. There are a variety of commercial financing options you can make use of and one in particular that can help companies that relay on accounts receivable: AR factoring.

What Is AR Factoring?

AR factoring is also called factoring or accounts receivable financing. Just like the last name implies, it uses your accounts receivable as a funding source.

How is this possible? It turns out that accounts receivable don’t have to be a risk — with the right partner, you can actually turn them into an asset.

There are many lenders out there who are willing to buy your accounts receivable for a portion of their value. When you agree to this arrangement, it’s called AR factoring.

What Are the Benefits?

AR factoring offers a variety of benefits. First, you don’t have to worry about going into debt like you would with other loans because AR factoring doesn’t require any repayment. Additionally, you don’t have to worry about putting up assets for collateral — the only things changing ownership are your accounts receivable.

Another great benefit is the application process. Lenders are generally more interested in your customers’ credit than yours, since they’ll now have the responsibility of collecting customer debt. With this responsibility off your plate, you also don’t have to worry about using resources to collect on debt that may never be paid.

Where Can You Get AR Financing?

Many lenders offer accounts receivable financing, including traditional banks and credit unions. However, you can also seek AR factoring through alternative lenders. These are private lenders who usually offer a variety of commercial loans that are designed for businesses’ unique needs. They’re generally quick to disperse funds, sometimes in as little as 24 hours. They also offer financing that may be easier for startups to qualify for. It’s a good idea to shop around before settling on a lender, as you’ll likely be with a AR factoring partner for the long-term.

When you rely on accounts receivable, factoring can be an excellent way to access capital without taking the risk of a loan. In fact, it can also provide a more reliable cash flow and make budgeting more consistent. There’s a lot you can take advantage of when you apply for accounts receivable