Accounts Receivable Financing

For small and medium sized companies, having cash tied up in unpaid invoices can seriously impede growth. Accounts receivable financing is a loan utilizing your eligible accounts receivable as collateral. This allows a company to continue growing without having to wait for their accounts receivables to be paid.

When we work with emerging growth companies seeking accounts receivable financing, but which do not otherwise satisfy stringent bank lending requirements, we introduce them to alternative lenders.  Alternative lenders are often family offices or funds that silo all or a portion of their capital to lend to growing companies. Alternative lenders differ from traditional bank lenders.  They tend to be more flexible with regard to structure, rates, and terms than traditional bank debt financing.

How We Work: ClearThink Capital is generally compensated solely by our client companies and generally does not accept referral fees or commissions from lenders. We, unlike our competitors, are highly incentivized to provide access to credit financing on superior terms with limited or no covenant coverage.

What Accounts Receivable Lender Look For

When deciding whether to finance a company’s accounts receivables, a lender will look at the following:

• Contracts: the validity of the contract or purchase order the company has in place can affect that company’s ability to be paid. A lender will usually want to review the contract or purchase order they are financing.
• Credit Worthiness: the credit worthiness of the obligor on the accounts receivable is one of the most important factors in the decision to lend to a company. If the company paying the invoice is of high credit worthiness, the lender will be more likely to finance the receivable, and at a lower rate.
• Time To Payment: accounts receivable lenders will generally finance receivables up to 90 days.
• Other Liens: does your company has other liens? This may affect some lenders’ abilities to finance your receivables, but many lenders can still structure an accounts receivable line for a company with outstanding liens.