Accounts Receivable Financing

Accounts Receivable Financing

Accounts receivable financing is a revolving line of credit based upon the accounts receivable of the borrower. By financing accounts receivable, a firm can speed its cash flow to meet current obligations without monthly repayment of principal or periodic out-of-debt requirements. As cash needs vary, the borrower is able to increase or reduce the loan amount without renegotiation, and the ability to borrow grows directly with accounts receivable.

A typical program enables a client to borrow a predetermined percentage, (usually 80%), of accounts receivable under an established line of credit. The client receives periodic advances, upon request, deposited directly into his bank account. If funds are not drawn, the loan balance will be reduced through collections, thus minimizing interest cost. Interest is charged on funds advanced, not the amount of sales assigned.

Accounts receivable loans can be on a non-notification basis: so our clients customers are not notified of the financing. Collections continue to come directly to the client to ensure customer relations are not disturbed. Deposits are handled with a coded endorsement to further ensure confidentiality.

Specific Invoice Financing

Specific Invoice Financing is a method of borrowing upon invoices selected by the borrower. Using this method of financing, a borrower can obtain advances on designated invoices which can be paid directly to Bay Business Credit by the borrower's customer. The remainder of the borrower's accounts receivable will continue to be handled in the normal manner by the borrower. This method of borrowing can be particularly convenient when the need to borrow is modest or on a less frequent basis.

Both Accounts Receivable financing and Specific Invoice Financing offer advantages to the borrower:

  • Borrower determines the timing of advances
  • Non-notification borrowing
  • Charges based on daily cash balance
  • Interest billed at end of month
  • Bookkeeping Support


Factoring is similar to accounts receivable financing in that accounts receivable are used to secure advances of cash for funding operations. The customer (account debtor) is notified that the invoice(s) have been assigned to Bay Business Credit. We provide you with reports each day informing you of collections received and your account receives credit for the funds received that day. There is no obligation to assign invoices and no long-term contract is required. We also can provide accounting support in the form of customer statements and agings of accounts receivable assigned.