At FSW Funding, we receive a number of inquiries each week, asking about the details of our AR financing program, and about AR financing in general. Our team has compiled a list of the most frequently asked questions about AR financing, along with answers in pain English to clear up any confusion.

What is AR financing?

AR financing stands for “accounts receivable financing” and is also known as factoring. This is a process by which receivables are monetized to provide a faster and stronger cash flow.

How does AR financing work?

Businesses usually issue customer invoices with staggered payment schedules of 30 days or longer. Accounts receivable financing eliminates payment schedules completely by immediately converting open invoices to cash.

What about collections?

When invoices age out of their payment schedules, those customer accounts are then handed over to collections. Unfortunately, collections can add up to a month before payments are received from the time the process is started. With accounts receivable financing, invoices never get a chance to become delinquent.

How much debt is involved?

AR financing provides a reliable and debt-free source of working capital. Business credit ratings are not negatively impacted, nor are there monthly payments. Accounts receivable financing is designed to help businesses reduce their reliance on traditional loans so they can focus on growth instead of worrying about debt.

What if customers don’t pay their invoices?

Accounts receivable financing is non-recourse, and comes with credit insurance for qualifying customers. This means that once your open invoices have been factored, the responsibility of getting payment from customers falls on us. Our job is to free up resources and automate your accounting procedures so you can focus on running your business. Sending out reminders, making calls for payments and settling accounts is our business.

Does my business qualify for factoring services?

The absolute baseline to qualify for accounts receivable financing is that your business issues invoices with staggered payment schedules of 30 days or more. This applies to businesses in any industry, from tech startups to healthcare providers, legal firms, manufacturers, and everyone in between.

Did we miss anything?

We carefully picked our questions from among the ones we receive most frequently. If we have missed something, or if there is a question you have about accounts receivable financing as it pertains to your own business, contact the team at FSW Funding. Our experts will be happy to give you any additional information you need.