Invoice Factoring vs. Accounts Receivable Line of Credit
HOW DOES INVOICE FACTORING COMPARE TO AN ACCOUNTS RECEIVABLE LINE OF CREDIT?
An accounts receivable line of credit and a non-recourse invoice factoring line both provide business financing by converting accounts receivable to cash. An AR line of credit is a loan secured by accounts receivable as collateral, whereas non-recourse invoice factoring is an outright purchase of accounts receivable for cash.
Because an accounts receivable line of credit is a loan, the borrower must have the financial ability to repay. This form of business financing requires:
- Strong Business Financials
- Positive Cash Flow
- Established Business Credit
In a non-recourse invoice factoring line, the factoring company bills the client’s customer directly, and secures its position by the customer’s credit rather than that of the client.
A full-service factoring company provides credit services and accounts receivable management in addition to business financing. Our services include new customer credit reviews, invoice processing, and collection services.
The invoice factoring company is typically more involved with the accounts receivable, it usually makes more cash flow available to the client business. Because of the higher risk and higher level of services, the cost of non-recourse invoice factoring is generally higher than that of an accounts receivable line of credit.
About Riviera Finance Invoice Factoring Company
Find out more about non-recourse invoice factoring with Riviera Finance. As an alternative to an accounts receivable line of credit, it’s a great form of business financing without debt and without the need for extensive business history. Over 10,000 companies have turned to Riviera Finance for their working capital needs.