A/R Line of Credit
Availability tied to all your receivables, draw what you need when you need it.
Let's talk about your A/R line of credit.
Two questions to start. No obligation, no credit pull.
How does an A/R line of credit work?
Most businesses carry a gap between when a cost is due and when a customer actually pays for it. An A/R line of credit closes that gap: it's a revolving facility you draw against as expenses come due and repay as receivables come in. Unlike a traditional bank line, approval is driven by the strength of your receivables and customer contracts, not three years of pristine financial statements.
The distinction matters most for companies that are growing quickly. A bank underwrites backward, asking what your company earned over the last three fiscal years. We underwrite forward, against the contracts and receivables you have in hand today. A company that just landed its largest customer yet is exactly who the second test is built for.
Because the facility revolves, it also fits the shape of how a business actually spends money. You draw when payroll and materials come due, repay when customers pay, and draw again on the next cycle, without re-applying or re-underwriting every time. Our guide explains how your limit, eligible receivables, and balance fit together.
Setting up a facility starts with a look at who owes you money, not just how much. We review your accounts receivable aging, your customer concentration, and how reliably your top payers have paid in the past. Strong, established customers on consistent terms generally support more than newer or unproven accounts, so two companies with similar receivables balances can see different results. Concentration is reviewed separately, because heavy reliance on one customer is its own kind of risk. Our guide on how advance rates work explains what affects them.
Pricing is built around that same review. A facility backed by strong, diversified receivables from creditworthy customers costs less to carry than one backed by thin or concentrated receivables, because the risk being priced is customer risk, not yours alone. We walk through the actual numbers on your book before you commit to anything, so the rate you are quoted reflects your real receivables, not a generic tier.
Things to know before you apply.
- Availability rises and falls with the receivables you carry, so a slow month of billing means a smaller line.
- It works best when your customers are other businesses that pay on invoice terms.
- If a bank or another lender already has a lien on your receivables, tell us up front, because it will need to be part of the conversation.
How the facility is structured.
Draw and repay repeatedly as your business needs capital, not a one-time advance.
Facility limits scale with your accounts receivable and contracts, not just historical revenue.
Keep operations funded through your normal customer billing and payment cycle.
Access funds quickly once the facility is established, with no re-underwriting on each draw.
A/R line of credit, invoice factoring, and payroll funding compared.
| Feature | A/R Line of Credit | Invoice Factoring | Payroll Funding |
|---|---|---|---|
| What it is | A revolving facility tied to your receivables. | A sale of unpaid invoices for an immediate advance. | An advance against revenue you have earned but not yet billed. |
| How you use it | Draw what you need, when you need it. | Submit the invoices you want turned into cash. | Draw against hours worked, usually up to 85% of earned but unbilled revenue. |
| What it is based on | Your receivables and billings. | The creditworthiness of your customers. | Work you have performed but not yet invoiced. |
| Choose which invoices | Availability follows all your receivables. | Yes, most arrangements let you select invoices or customers. | Not invoice by invoice, since it covers work before billing. |
| Best for | Steady, recurring billings and changing cash needs. | Large or specific invoices, and customers on long payment terms. | Labor-heavy work where payroll comes due before you can bill. |
A/R Line of Credit questions, answered.
How is this different from a bank line of credit?
A bank line is underwritten primarily on your company’s financial history: typically several years of statements, profitability, and overall financial strength. We look first at your eligible receivables and your customers’ payment history, which can make capital available to companies whose recent growth outpaces their financial history.
What can the line be used for?
Payroll, materials, inventory, subcontractors, or any working capital need that comes up between billing a customer and getting paid. There is no restriction to a single use.
How does repayment work?
Draws are repaid as your customers pay their invoices. Because the facility revolves, repaying a draw reduces your outstanding balance, and you can draw again as long as you stay within your approved limit and have eligible receivables to support it.
How is an A/R line of credit different from invoice factoring?
An A/R line of credit is a facility: you draw what you need and pay interest on the balance outstanding. Factoring sells individual invoices for an advance. A line is usually more efficient when the need recurs across your whole receivables book; factoring is often simpler when you want to fund specific invoices.
What documents do you need to get started?
Typically an accounts receivable aging report, a customer list, recent bank statements, and basic financials. There is no requirement for three years of audited statements; the receivables themselves carry most of the weight in underwriting.
What happens if one of my customers pays late?
One late payer matters less on a facility than on a single invoice, because availability is calculated across your eligible receivables as a whole. Very late invoices can become ineligible, and heavy reliance on one customer is reviewed, so it helps to tell us about slow accounts early.
Can the credit limit grow as my business grows?
Yes. Your availability follows the eligible receivables you carry, so it rises as your billings grow, up to your approved facility limit. If your needs outgrow that limit, talk to us about increasing it.
Learn more before you decide.
Industries that use an A/R line of credit.
- Transportation & Trucking
- Manufacturing
- Wholesale & Distribution
- Staffing & Recruiting
- Printing & Packaging
- Business & Professional Services
- Technology & IT Services
- Security Services
- Janitorial & Facility Services
- Oilfield & Energy Services
- Healthcare & Medical Staffing
- Food & Beverage
- Import & Export
- Telecommunications
- Logistics & Freight Brokerage
- Warehousing & Fulfillment
- Marketing & Advertising
- Government Contractors
Ready to fund your business?
Tell us about your company and we'll get in contact with you to discuss next steps. There is no cost or obligation to get started.