Accounts receivable financing turns issued B2B invoices into operating cash while customers still sit on net-30, net-60, or net-90 terms.
An arranged receivables facility finances the operating company; property acquisitions instead belong with loans from $2 million to $10 million.
You have already shipped or performed. Payment is coming — but payroll, suppliers, and the next job are due now.
Typical facilities: $250,000–$15 million, one to twelve months, secured by eligible receivables (and sometimes inventory or equipment in the same file). Repayment aligns with customer remittance — weekly or bi-weekly sweeps on qualified structures.
Jaken Finance Group arranges AR-backed working capital. We originate DSCR and hard money on investment property separately.
Upload or summarize: AR aging, top ten customers by balance, concentration limits, and payment history.
AR financing vs PO vs inventory
| You are here when… | Product |
|---|---|
| Invoices out, cash in | AR financing (this page) |
| PO in hand, need to pay supplier before ship | Purchase order financing |
| Need stock on the shelf, not one invoice pool | Inventory financing |
| Need $50K–$500K, no receivables pledged | Unsecured term loans |
What makes receivables eligible
Lenders discount who owes you and how clean the paper is.
- Creditworthy payors — Investment-grade customer vs disputed small account
- Concentration — Too much AR with one buyer increases risk
- Liens — Existing UCC filings on AR must be disclosed
- Disputes — Chargebacks, warranty holds, and short-pays reduce advance rates
- Government vs commercial — Payment certainty and timing differ
An AR aging report is the starting document — current, 30, 60, 90+, and any credits on account.
AR financing vs merchant cash advance
Merchant cash advances pull daily or weekly from card or ACH receipts at factor-style cost with no clear term end.
AR financing, as arranged here, usually has:
- A defined maturity (1–12 months)
- A borrowing base tied to eligible invoices
- A quoted cost structure per file — not an open-ended factor
If you are already in an MCA, model the swap on refinance a merchant cash advance before adding another layer.
Worked illustration: healthcare services lag (composite)
Illustration only — not a live quote.
A $34 million multi-site outpatient services group adds two locations. Payer remittance runs 45–75 days after claim submission. Payroll and supply vendors are bi-weekly.
- Need: $2.1 million for eight months
- Collateral: Eligible receivables from commercial payers with clean aging
- Repayment: Bi-weekly sweeps as claims pay
- Exit: Self-liquidating as new sites hit steady-state collections; SBA working capital possible later for permanent line
Numbers and geography are illustrative — not a live deal log.
Worked illustration: project billing cycle (composite)
Illustration only — not a live quote.
A $16 million technical services firm completes milestone billing on a twelve-month implementation contract. The customer pays net-45 after each milestone sign-off. Headcount for the next phase must be hired now.
- Need: $740,000 for six months
- Collateral: Milestone invoices issued and accepted, plus corporate guaranty
- Contrast: PO financing would apply before milestones were billable
Hub page: short-term working capital loans.
Combining AR with other collateral
| Collateral mix | Typical use |
|---|---|
| AR only | Services, staffing, healthcare billing |
| AR + inventory | Distribution, manufacturing with WIP |
| AR + equipment | Asset-heavy ops with slow payers |
| AR + real estate | Larger facilities where RE supports the stack |
Real estate on the investment-property side still uses DSCR or bridge — do not mix owner-occupied ops AR with a rental refi on the same form without clarifying entities.
Related guides
- Short-term working capital vs SBA
- SBA alternative financing — when 7(a) is too slow
- Business acquisition bridge — buying a company, not billing lag
What to expect after you submit
Submit current aging, concentration by customer, and dispute notes on day one. Lenders advance against eligible invoices only — credits, short-pays, and government billing lags each change the borrowing base. Most AR files quote in three to ten business days when payor quality is clear. If one customer is more than 25–30% of the pool, expect questions on concentration limits and backup payors. Clean, investment-grade receivables typically advance at higher rates than disputed or slow-pay accounts. Government and healthcare payor pools may need extra documentation on remittance cycles before an advance rate is set.
What the Uniform Commercial Code calls an account
Article 9 uses a specific word. An “account” is a right to payment of a monetary obligation, whether or not already earned, for property that has been or is to be sold, leased, licensed, assigned, or otherwise disposed of, and for services rendered or to be rendered. That definition is UCC § 9-102(a)(2), as published by Cornell’s Legal Information Institute. A B2B invoice for work you already did is the everyday example. A consumer credit-card slip and a pure deposit account are different collateral types. Do not send a merchant batch and call it accounts receivable.
UCC § 9-406(a) covers notice to the customer who owes the invoice. Until that account debtor gets an authenticated notice that the amount has been assigned and must be paid to the assignee, the customer can still pay you and discharge the debt. After a proper notice, payment to you may not discharge it. That is why some facilities notify customers and some do not. Notification is a legal and relationship choice. It is not a moral label. This is a description of the uniform text, not legal advice for your state enactment. Confirm the adopted version with counsel before you sign a notice letter.
How a borrowing base is built
Lenders do not advance 100 cents on every line of the aging. They start with the gross aging, then remove invoices that are not eligible. Common cuts, as a diligence practice rather than a statute:
- Past-due beyond the facility’s cutoff, often 90 days
- Credits, short-pays, and invoices already in dispute
- Related-party billings
- A customer who is over a concentration cap
- Foreign payors if the facility is domestic only
- Pre-billed work that § 9-102 might still call an account, but that the lender will not fund until acceptance
Illustration only. Not a quote.
A distributor shows $1,600,000 of invoices. Credits are $80,000. Invoices over 90 days are $140,000. One customer is $480,000, which is 30% of the gross. The lender’s illustration cap is 25% of eligible receivables, so $80,000 of that customer is excess. Eligible invoices are $1,600,000 minus $80,000 minus $140,000 minus $80,000, or $1,300,000. An illustrative 80% advance on eligible invoices is $1,040,000. If payroll and the next container need $900,000 for five months, the base covers the request. If they need $1,300,000, the base does not, and the file needs another collateral piece or more equity.
Jaken Finance Group arranges these facilities. It does not publish a fixed advance rate. Size, price, and advance are quoted per file. The published frame for short-term working capital is about 10% of trailing-twelve-month revenue or about one times trailing EBITDA, still quoted per file, from $250,000 to $15 million, for 1–12 months. A complete file is quoted in 3–10 business days.
SBA 7(a) is a different tool
The SBA 7(a) program can fund short- and long-term working capital, equipment, and real estate. The maximum 7(a) loan amount is $5 million. Eligibility turns on what the business does, its credit history, and where it operates. That is a government-guaranteed term loan through a participating lender. It is not an invoice borrowing base.
Use 7(a) when you want a longer amortization and you can live with the lender’s package. Use an AR facility when issued invoices are the collateral and the gap is measured in months, not years. Many operators take the short facility first, then refinance into a bank or SBA line once the new sites have a payment history. See short-term working capital versus SBA.
A healthcare billing lag, with the cuts shown
Illustration only. Not a live quote.
A regional therapy group bills commercial plans. Gross outstanding claims are $3,400,000. The biller flags $420,000 as denied or patient-responsibility. Another $260,000 is older than 90 days. Eligible commercial claims are $2,720,000. At an illustrative 70% advance, because healthcare remits are slower than a standard net-30 manufacturer, the base is about $1,904,000. The group needs $1,500,000 for seven months to open two clinics. The base covers it if the plans stay current. It does not cover it if denials jump and nobody rebills.
That is why the aging alone is not enough. Send denial codes, the top ten payors, and the average days from claim to cash. Government payors can be eligible and still slow. Say so on day one.
What to send with the request
| Item | Why it changes the number |
|---|---|
| Current aging, with credits | Sets the gross pool |
| Top ten customers and the share of each | Tests concentration |
| Sample invoices and proof of delivery or acceptance | Shows the account is real |
| Dispute and short-pay log | Comes out of eligible |
| Existing UCC filings | AR may already be pledged |
| Trailing revenue and a simple cash forecast | Tests the 10% of revenue frame |
| Entity chart | Keeps operating AR off the rental LLC |
Do not pledge the same invoices to a card advance and an AR facility. If you are in a merchant cash advance, model the exit on refinance a merchant cash advance before you stack another lien.
Investment property still belongs on its own product. A rental refinance is DSCR or bridge. An operating company’s invoices go on the commercial request. Mixing the two on one form slows both files.
Mistakes that shrink the advance
- Treating proposals as invoices. A signed proposal is not an account until there is a right to payment for property or services.
- Hiding credits in a separate tab. Lenders find them in the reconciliation.
- One customer above a quarter of the book, with no backup payor and no explanation.
- A tax lien or a prior UCC on all assets, undisclosed.
- Using the facility to fund a loss, not a timing gap. Collections will not repay a loan if the work was unprofitable.
A one-week path for a clean aging
Day one, send the aging, the top customers, and any UCC you already know about. Day two, answer concentration and dispute questions. If the payors are commercial and the credits are explained, a quote can land inside the 3–10 business day window. Do not wait for a perfect audit package if payroll is Friday. Label estimates as estimates.
Keep the operating company and the rental LLC apart. An invoice facility does not become a DSCR loan because the owner also holds houses. And a rental refinance does not sweep the company’s receivables. Two requests, two collateral stories.
If the invoices are clean and the term is inside a year, attach the aging and the customer list to the commercial loan request. Call (833) 264-7776 if the payroll date is inside two weeks and the file needs a same-week look.
Jaken Finance Group arranges accounts receivable financing for U.S. operating companies. Pricing and structure quoted per file.