Accounts Receivable Factoring: How AR Factoring Works
Accounts receivable factoring and invoice factoring are the same product. The term changes with company size, not with mechanics.
If you have arrived here from a controller or finance-director role rather than an owner-operator one, the vocabulary differs but the product does not. AR factoring converts receivables into immediate cash by selling them at a discount. The considerations that matter at your scale, however, are different from the ones that matter to a one-truck carrier.
Structures you will be offered
- Notification vs non-notification. Whether your customers are instructed to remit to the factor. Non-notification requires stronger financials and costs more.
- Recourse vs non-recourse. Where credit risk sits. Full breakdown →
- Whole-turnover vs selective. Entire ledger, or chosen accounts only.
- Concentration limits. Caps on single-customer exposure. Frequently the binding constraint at mid-market scale.
- Facility ceilings and step-ups. What triggers an increase, and how quickly.
AR factoring vs an asset-based line of credit
| AR factoring | ABL / AR line of credit | |
|---|---|---|
| Cost | Higher | Lower |
| Qualification | Light — customer credit driven | Heavy — covenants, reporting, audited or reviewed financials |
| Speed to set up | Days | Weeks to months |
| Collections | Transferred to the factor | Retained by you |
| Ongoing reporting | Invoice-level submission | Borrowing-base certificates, covenant compliance |
| Best for | Speed, growth, weaker balance sheet | Established companies with clean financials |
Companies frequently graduate from factoring to ABL as they mature. Check the UCC release terms in your factoring agreement before you assume that transition is straightforward — a slow release blocks the incoming lender from taking first position.
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Accounting treatment
Whether a factoring arrangement is treated as a true sale or as secured borrowing depends on the transfer of control and risk. Non-recourse structures are more likely to qualify as a sale, which determines whether the receivable leaves your balance sheet and how the facility appears in your ratios.
This matters if you have covenants elsewhere, are preparing for a raise, or report to a board on leverage. Confirm treatment with your accountant before signing — we publish research, not accounting advice, and the answer depends on the specific contract language.
Diligence questions at mid-market scale
- What is the concentration limit per customer, and what happens to ineligible receivables?
- What are the dilution assumptions, and how are credit notes and short-pays handled?
- What is the facility ceiling, and what specifically triggers a step-up?
- How is the reserve calculated, and how quickly does it release after collection?
- What are the reporting requirements, and can they integrate with our ERP?
- What is the UCC release timeline on termination?
How to read the blanks on this site
Every populated figure on this site was read from the company's own published pages, with the source and date attached. Where a cell says Not published, the company does not put that term in writing on its site — and in a market where the contract matters more than the headline rate, what a factor declines to publish is often the more useful signal. We never fill a gap with an estimate.
| Company | Advertised rate | Also publishes | Status |
|---|---|---|---|
| eCapitalecapital.com | 1%–5% or more (own published range) | Recourse and non-recourse | Sourced |
| American Receivableamericanreceivable.com | From 0.8% | Advance Up to 95% · Recourse and non-recourse · No long-term contracts · Minimum: None (no monthly minimums or maximums) | Sourced |
| AltLinealtline.sobanco.com | Not published | Recourse and non-recourse | Sourced |
| Riviera Financerivierafinance.com | Not published | Non-recourse (full-service) | Sourced |
| Summar Financialsummar.com | Not published | Non-recourse + credit guarantee (“Summar Shield”) | Sourced |
| 1st Commercial Credit1stcommercialcredit.com | 0.69%–1.59% | Nothing published | Sourced |
| FundThroughfundthrough.com | 1.9%–2.9% per 30 days | Advance Up to 100% | Sourced |
| United Capital Fundingucfunding.com | Not published | Recourse and non-recourse | Sourced |
| Factor Findersfactorfinders.com | Up to 3% first 30 days | Advance 80–90% | Sourced |
| Universal Fundinguniversalfunding.com | 0.55%–2% first 30 days | Advance Up to 95% · Minimum: $25K/mo volume floor (published range $25K–$20M) | Sourced |
| Charter Capitalchartercapitalusa.com | Not published | Nothing published | Publishes nothing |
| Gateway Commercial Financegatewaycfs.com | Not published | Advance Up to 97% · Non-recourse available · Minimum: Lines from $25K to $10M | Sourced |
| Interstate Capitalinterstatecapital.com | Not published | Nothing published | Publishes nothing |
11 of 13 companies publish at least one verifiable term. Everything shown was read from the company's own pages on 2026-07-29 — hover a Sourced tag for the exact page. “Publishes nothing” means exactly that: the company puts no rate, advance, recourse or contract term in writing publicly. In this market that is the norm rather than the exception, and it is the reason a comparison table cannot pick your factor on its own. How collection works →