5 Things You Didn’t Know about Accounts Receivable Finance

While many business owners are familiar with standard or asset-based loans and traditional invoice factoring, alternatives such as accounts receivable finance can influence how companies access working capital.

Accounts Receivable Finance (ARF) helps businesses manage their cash flow by leveraging outstanding invoices and other receivables for funding. This financing channel provides benefits that bank loans and traditional factoring usually cannot.

In this blog, we’ll detail five facts about ARF that could transform how you support your business’s growth and stability, whether you’re a small business owner or a financial manager at a larger corporation.

1. Accounts Receivable Finance is a non-debt solution.

This is perhaps one of the most compelling aspects of ARF. Unlike traditional loans, which add to your company’s liabilities, ARF allows you to leverage your accounts receivable to obtain funding without incurring additional debt.

By partnering with a provider like Raistone, qualified companies can use their outstanding invoices to secure the capital they need when they need it. This strategy helps maintain a healthier balance sheet and provides flexibility compared to other debt financing options.

For example, working with Raistone prevents the hassles associated with traditional invoice factoring, such as lenders having all the power to hand down high interest rates. Because of our curated marketplace of investors who help fund our programs, we’re able to offer lower rates than companies like yours are generally able to get elsewhere.

2. Accounts Receivable Finance does not dilute equity.

Equity dilution is a common concern for business owners seeking additional funding. Fortunately, ARF does not require you to give up any ownership of your business. Unlike equity financing, where you must sell shares to raise capital, ARF allows you to obtain funding while retaining full control of your company.

This is particularly crucial for entrepreneurs to maintain ownership and control while accessing the financial resources necessary for growth. By using ARF, you achieve the best rates on your receivables and ensure that your business’s equity remains intact, which is vital for long-term strategic planning and decision-making.

3. There are no commitments (or non-utilization fees).

A significant advantage of ARF is the absence of non-utilization costs and other liabilities. Bank loans and lines of credit usually come with fees for unused credit, which can be a financial burden for businesses that do not utilize their full credit limit.

Instead, you have the flexibility to determine the amount of capital you need and only pay for the amount you use, and you avoid the higher fees and rigid terms often found in traditional invoice factoring. You are not charged for funds you do not need and are not forced into terms that are unfavorable to your business. This way, you can manage your finances more strategically.

Unlike bank lenders who typically charge fees based on the total credit line, ARF providers like Raistone offer a dynamic approach. This gives you the ability to be more agile in your decision making.

4. There is no limit to funding capacity.

We’re proud to support and celebrate business growth at Raistone. Say you jump from $5 million to $50 million in sales overnight — Raistone can grow with you to help meet increased demand.

This scalability is a significant advantage over banks, which generally impose limits based on the number of buyers or other constraints and have long credit approval processes. With ARF, the primary consideration is the credit quality of your buyers, rather than rigid limits imposed by banks or traditional invoice factoring services. This flexibility allows your business to expand and adapt without being constrained by the customary red tape so often found at old-school financial institutions.

5. Accounts Receivable Finance with Raistone can advance up to 100% of invoice value.

One of the standout features of ARF through Raistone is the ability to advance up to 100% of the value of your invoices. This is notably higher compared to traditional lines of credit or asset-based loans (ABL), which typically advance only 70-80%.

This higher advanced rate provides greater liquidity and financial flexibility. Raistone also offers the power of capital markets to its clients. This sets us apart from traditional factoring services, which often come with burdensome stipulations such as high interest rates and other rules that benefit the bank or factoring company more than the business seeking help.

Additionally, our industry-agnostic approach means there are fewer limitations on the types of industries that can benefit from ARF, making it a versatile option for various business sectors.

Transform your strategy with Accounts Receivable Finance

From its non-debt nature and lack of equity dilution to the absence of commitment fees and scalable funding capacity, ARF presents a compelling alternative to traditional financing methods such as loans or factoring.

Understanding ARF can help you make more informed decisions and fully utilize this financial tool to support your business’s growth and stability.

Ready to move past traditional factoring and learn more about how accounts receivable finance can benefit your business? Contact the Raistone team today to discover how ARF can be tailored to meet your company’s unique needs.

About the Author

Alexi Kavourakis serves as Head of Sales at Raistone, managing a global team that drives business growth across all customer segments and profiles. Prior to joining Raistone, Alexi was Vice President of Global Trade Finance at Sumitomo Mitsui Banking Corporation, where he originated and executed trade finance deals for corporate clients across a variety of industries. He also previously served as Corporate Banking Relationship Manager at Standard Chartered Bank. With over 15 years of experience, Alexi brings a wealth of knowledge to Raistone, overseeing the performance, strategy, and alignment of revenue-generating activity.