Accounts receivable financing: three ways to turn unpaid invoices into working capital.
Accounts receivable financing gives you cash against invoices your customers haven't paid yet. There are three main structures: invoice factoring, a receivables line of credit and asset-based lending. Which one fits depends mostly on how much you invoice each month and how much reporting you can handle.
Daniel Chirino · Business Development Officer, 1st Commercial Credit
Updated: October 29, 2026
- Since 20021st Commercial Credit
- 3,800+clients funded
- $5B+funded
- Direct fundernot a broker
- Every costin writing before you sign
1st Commercial Credit figures from its website, read October 29, 2026.
Three structures, by size
Invoice factoring
- You sell invoices and get an advance on each one, up to 97% depending on the industry.
- From about $10,000 a month in sales up to $10 million.
- Rates from 0.69% to 1.59%, depending on your volume, how fast your customers pay and their credit. 1st Commercial Credit says its average client pays about 2.25%, depending on how many days the invoices take to be paid.
- Approval mainly based on your customers' credit. Many programs don't ask for financial statements.
- The factor collects from your customers.
Receivables line of credit
- 1st Commercial Credit calls it a sales ledger line: a revolving line of $3 million to $20 million based on your eligible receivables.
- Advance typically 70% to 90%, funded 24 to 48 hours after the invoices are verified.
- You keep collecting from your customers. Payments go to a lockbox managed by 1st Commercial Credit.
- It asks for 2 years of financial statements and regular aging reports.
Asset-based lending
- A revolving loan secured by receivables and, in part, inventory.
- Facilities from $3 million, for companies with $2.5 million to $10 million in monthly sales.
- Built around recurring invoicing to the same customers.
How much you can get: the borrowing base
In a receivables line, what you can draw is your borrowing base: eligible receivables times the advance rate. 1st Commercial Credit's own example: $5 million in eligible invoices at a 90% advance rate gives $4.5 million available. As customers pay and you invoice again, the line refills.
"Eligible" matters. Invoices that are too old, disputed or owed by customers with weak credit usually don't count. That's why the same company can have $6 million in receivables and a smaller line than it expected.
What you need to apply
- Your accounts receivable aging report.
- The credit limit you'd like for each customer.
- Your articles of incorporation.
- Copies of your outstanding invoices, and the purchase orders or rate confirmations behind them.
At 1st Commercial Credit, the application is online and the account is set up in 3 to 5 business days. Sometimes there's an answer the same day.
A young company can qualify if it has qualified invoices to creditworthy customers, and tax liens are reviewed case by case.
Sources: 1st Commercial Credit's pages for accounts receivable financing, invoice factoring, sales ledger lines of credit and asset-based lending, read October 29, 2026. Terms are confirmed in writing before you sign.
When it's not the right tool
- Your customers pay on delivery or within 15 days. There's no gap to finance.
- You sell to consumers. These structures work on invoices to businesses or the government.
- Your receivables are pledged to a bank line of credit and the bank won't make room. If what you have is a term loan, look at second position factoring.
- The problem is margin, not timing.
Questions owners ask me about receivables financing
Is accounts receivable financing a loan?
It depends on the structure. Factoring is a sale of invoices. 1st Commercial Credit sets up its sales ledger line as a continuing purchase of receivables too. Asset-based lending is a loan secured by your assets.
Who collects from my customers?
In factoring, the factor does. In a sales ledger line, you keep collecting and your customers pay into a lockbox managed by 1st Commercial Credit.
Which one is cheaper?
It depends on your volume, how fast your customers pay and their credit. Bigger, more structured lines usually cost less per dollar but ask for more reporting. I'll walk you through every cost in writing before you sign.
How much do you invoice a month?
That number, and who your customers are, decide which structure fits. Start here and I'll take it from there.
Also read: how invoice factoring works · factoring vs a bank line of credit · all financing options