How to Sell Accounts Receivable to A/R Factoring Companies

anagentile's picture
BFF Manager

The biggest problem many businesses face today is not being able to get cash flow quickly enough to pay the bills. Selling your Sell Accounts Receivableaccount receivables to factoring companies may be a viable solution to quickly get the money you need.

Accounts receivable factoring provides finance against unpaid invoices. Regardless of their current financial condition, credit history or time in business, businesses providing goods or services to other businesses on terms may be eligible to sell their accounts receivables to a factoring company.

Typical factoring clients have previously been declined credit by a bank and have one or more of the following characteristics:

Rapid Growth
Poor Personal or Business Credit
Operating Losses
Start-ups or Small Businesses
Negative Net Worth
Delinquent Taxes
Highly Leveraged
Prior Bankruptcies

They also belong to diverse industry niches such as:

  • Construction companies
  • Government contractors
  • Security companies
  • Staffing agencies
  • Commercial services
  • Product suppliers
  • Technology companies
  • Trucking and transportation companies, and many others


Why do companies sell their receivables?

Selling accounts receivables helps companies cover temporary cash flow needs while they wait for their customers to pay. Typical uses include inventory purchases, payroll funding, capital expenditures, and the payment of vendors and other miscellaneous business expenses.

What are the benefits of selling accounts receivables?

Factoring offers several advantages to well-established and also to small businesses; here are a few of them:

  • Available to businesses in most industries
  • You don’t need to wait for your customers to pay your invoices
  • Your business gets a quick cash flow boost. Receive money in just days
  • Improves your company’s working capital in a short period of time
  • Your company  can choose what clients and invoices to factor
  • There are no limitations to the use of the amount advanced. You are free to pay for any business expenses, payroll, inventory, or to buy any other business assets that you want.


How to sell your accounts receivable to a factoring company?

Selling receivables is a very simple and straightforward process:

  • Your business completes a quick application and after approval signs a contract with a factor.
  • Right after your company delivers goods or services to your client you submit your invoice to your factor.
  • The factoring company advances you the previously agreed percentage value, usually 80 to 90%, of the invoice within 24 hours.
  • When the invoice is due the factoring company collects outstanding debt, deducts its discount fee and then pays you the balance of the invoice amount.


What does your business need to qualify?

  • Sell to other companies giving them payment terms of 90 days or less
  • Have creditworthy customers
  • Meet the typical minimum requirements of $5000 in monthly sales


How to find the best A/R factoring company for your business?

Accounts receivable factoring is a value-added service and you should not choose your factoring company based on cost alone. Factoring not only provides a working capital facility that grows with your business but also offers a credit control function.

The most important qualities of a receivable factoring company are the capacity to provide the right level of funding against your unpaid invoices and the ability to deliver a credit control service and management of payment collections in a timely, professional and courteous manner. At Gateway Commercial Finance, we have perfected our factoring program guaranteeing timely funding of your invoices without disturbing your customers.

We use advanced communication guidelines and state-of-the-art technology to provide you working capital when you need it while protecting your business’s reputation.


Typical FAQs regarding selling receivables from potential clients

Is selling accounts receivables a better option than receivables financing or a bank loan?

It depends.

A bank loan is a no-brainer option when a business has money issues but many companies do not qualify for a variety of reasons. In these cases, you should consider the other two funding services to access cash flow.

Receivable financing is similar to bank financing but with a much higher interest rate. It’s basically a loan for a pre-defined period of time that uses an asset (your invoice) as collateral.

Contrary to the two previous offers, selling accounts receivables does not create debt. Your factor buys your receivable and waits for the payment to arrive. Then charges a discount fee based on a pre-agreed discount rate and deposits your balance right away. Factoring is not a loan but the purchase of your receivables.

If you don’t want to add debt to your ledgers selling accounts receivables is a much better option than financing receivables.


What do I need to do to start selling receivables?

You need to fill up a free factoring application. After it has been approved and an invoice factoring contract is signed, we’ll set up your account and you’ll be ready to start selling receivables in days.


Can I sell my accounts receivables to pay for purchase orders?

We provide purchase order financing (PO finance) services on a case by case basis.


Do you have any factoring videos and articles to help me learn more?

We have tons of resources on this site and social channels available for you. You can find videos on YouTube or read the following in-depth articles on our website:

There many more articles and other resources about factoring of accounts receivables in the main area of our site, please check it out if you wish to learn more (add link)


Why should you consider working with Gateway Commercial Finance?

Our company has been providing cash flow solutions to customers all over the US for over 13 years. We have hundreds of happy clients doing businesses in a wide variety of industries such as construction, staffing, farming, business services, government supply, and many more. We are glad to provide references upon request.

And the best of all, we are one of the very few factors that put you in touch with our managing director from the first contact. You’ll never talk to 3rd party intermediates…our promise.

You’re careful in your business decisions, hiring key employees, buying from strategic suppliers. Funding your business should be no exception.

Take the time to contact us today, and see why our commercial finance company is an ideal factor to help your business grow. Call our toll free phone 1-855-424-2955 or fill up a free Factoring Quote Form and our managing director will be in touch with you right away.

Invoice Factoring
Business Finance
Get Started
Go to top