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Receivables Finance
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Receivables Finance Services
Receivables Finance is an overarching term that covers various financing methods, including factoring and invoice discounting, to unlock capital tied up in unpaid invoices. By advancing cash against these receivables, you can handle operational costs, explore expansion opportunities, or invest in research and development without waiting for clients to remit payment. This swift infusion of funds can also help strengthen supplier relationships through timely settlements.
At Commercial Finance Partners, we assess your unique business model and client base to customize a receivables finance structure. We manage risk assessments and credit checks, leaving you free to focus on building stronger customer relationships. Collections typically run through a lockbox arrangement that applies customer payments to a collateral deposit account the lender controls. Whether you’re a small business or a larger enterprise, our solutions facilitate smoother financial planning, enabling a more agile response to market shifts.
Immediate Liquidity
Get same-day funding on verified invoices, avoiding protracted payment delays.
Scalable Solutions
Adjust the amount of financing in step with your business growth and invoice volume.
Lockbox Collections
Customer payments typically go to a lockbox or collection account the lender controls, and borrowing base reports track your availability.
Enhanced Planning
Accurate cash flow projections let you budget for expansion and strategic investments confidently.
Receivables Finance Business Case Studies
Receivables Finance Transformed a Wholesale Distributor
Streamlined cash for bulk orders:
- Stabilized procurement cycles
- Secured supplier discounts
- Reduced reliance on overdrafts
- Balanced seasonal fluctuations
- Strengthened client relations
How Receivables Finance Supported a Marketing Agency’s Growth
Ensured timely payroll for creative staff:
- Avoided scope cutbacks
- Increased morale and retention
- Maintained client satisfaction
- Expanded service offerings
- Improved net profit margins
Receivables Finance Aided an International Exporter
Minimized currency exchange delays:
- Boosted foreign market entries
- Funded logistics enhancements
- Reduced invoice discrepancies
- Strengthened global partnerships
- Supported competitive pricing
The importance of
Receivables Finance
Why Choose Commercial Finance Partners:
✦
Crafted customized financing that aligns with your receivable turnover.✦
You borrow against your receivables instead of selling them, with customer payments typically routed to a lockbox the lender controls.✦
We adapt to your growth trajectory with scalable solutions.✦
Ensured transparent funding timelines for confident financial planning.✦
We partner closely with you, fostering a long-term path to stability and expansion.
How Receivables Finance Works in Asset-Based Lending
In an asset-based loan, the borrowing base consists primarily of working assets such as accounts receivable and inventory. Common advance rates range from 70% to 85% of eligible accounts receivable, and some banks advance up to 90% against eligible business-to-business receivables; effective advance rates are often lower after historical dilution and minimum reserves are subtracted. Commercial Finance Partners advances 90%+ on eligible receivables, funded from our own balance sheet.
In most ABL transactions the lender controls, or reserves the right to control, your cash receipts, usually through a lockbox: customers send payments to a collection account the lender controls. Lenders verify the collateral with borrowing base certificates and receivable agings — as often as daily, depending on the borrower’s risk profile — and with field audits, often quarterly. Source: OCC Comptroller’s Handbook, “Asset-Based Lending”.
What Makes a Receivable Eligible?
To be eligible, a receivable generally must arise in the ordinary course of business and be subject to the lender’s perfected first-priority security interest. An account is normally ineligible when it is more than 90 days from the invoice date. Lenders also commonly exclude affiliate receivables, contra accounts, re-aged invoices and balances above concentration limits, and they track dilution from returns, allowances and disputes.
Receivables Finance vs. Invoice Factoring
With asset-based lending you borrow against your receivables rather than selling them. With invoice factoring, a company sells its accounts receivable, traditionally without recourse, to a third party known as a factor, which assumes the risk of collection. Compare both on our accounts receivable financing page. Receivables can also be combined with inventory finance and equipment finance in one asset-based lending facility.
Receivables Finance FAQs
What is receivables finance?
Receivables finance is borrowing secured by your accounts receivable — money customers owe you for goods or services bought on open account. The lender advances a percentage of eligible receivables, and cash collected from customers is the typical source of repayment. In asset-based lending, receivables are usually the core of the borrowing base, together with inventory.
How much can you borrow against accounts receivable?
Common advance rates range from 70% to 85% of eligible accounts receivable, according to the OCC’s Comptroller’s Handbook, and some banks advance up to 90% against eligible business-to-business receivables. Commercial Finance Partners advances 90%+ on eligible receivables, funded from our own balance sheet. Effective advance rates are often lower after subtracting historical dilution and minimum reserves, and a lender may advance less against receivables concentrated in a few customers.
Which receivables are ineligible for a borrowing base?
A receivable is normally ineligible when it is more than 90 days from the invoice date. Lenders also commonly exclude receivables above concentration limits, affiliate receivables, re-aged receivables, contra accounts and unbilled receivables. Foreign receivables are often eligible only with a letter of credit or credit insurance.
Is receivables finance the same as invoice factoring?
No. With asset-based lending you do not sell your receivables; you borrow against them. In factoring, a company sells its accounts receivable, traditionally without recourse, to a factor that assumes the risk of collection.
The financing solutions provided by Commercial Finance Partners were exactly what I needed. Their team was professional and helped me every step of the way
Matthew Rodriguez Business Owner