Accounts Receivable Financing in Texas
Accounts receivable financing (AR financing) is a method of borrowing against outstanding invoices owed to your business. The lender advances a percentage of your AR balance — typically 70–90% — and collects from you as customers pay. It differs from factoring in that you retain ownership of the receivables; the lender uses them as collateral, not as a purchase.
- Advance rate: typically 70–90% of eligible receivables
- Eligibility: receivables generally must be under 90 days old and from creditworthy debtors
- Factoring vs. AR financing: factoring is a sale of receivables; AR financing is a loan against them
- Minimum AR volume: most lenders require $50,000–$250,000 in monthly invoices
- Industries: construction, staffing, manufacturing, distribution, oilfield services, government contractors
Overview
Accounts receivable financing addresses a specific business problem: your customers owe you money, but they haven't paid yet, and you need cash now to meet operating expenses or fund the next job. Instead of waiting 30, 60, or 90 days for payment, you borrow against the invoice.
There are two distinct structures under the AR financing umbrella:
Accounts receivable loans or lines of credit use receivables as collateral. You retain ownership of the invoices, pledge them to the lender, and repay the advance as customers pay you. The lender may or may not verify invoices or notify your customers of the arrangement. This structure is used most often in ABL facilities for mid-sized businesses.
Invoice factoring involves selling the invoices to a factoring company (the factor) at a discount. The factor owns the receivable and collects directly from your customer. This is not technically a loan — it is an asset sale. Factoring is covered in this directory under AR financing as a related product because borrowers frequently search for one when they need the other.
In Texas, AR financing and factoring are extensively used by oilfield services companies (billing major operators on 60–90 day terms), construction subcontractors (waiting on general contractor payment), staffing agencies (billing corporate clients weekly), and government contractors (billing federal or state agencies on extended terms).
The key risk in AR financing: if your customers do not pay, you still owe the lender. AR financing is not a substitute for customer creditworthiness — it accelerates collection of receivables that are expected to be paid.
Verified Lenders
This category is being populated.
Lenders are added as they pass The Registry Standard verification. Check back or use the Get Matched form to describe your situation directly.
Frequently Asked Questions
What is the difference between AR financing and invoice factoring?
AR financing (or an AR line of credit) is a loan using your receivables as collateral — you retain ownership of the invoices. Invoice factoring is a sale — you transfer ownership of the invoice to the factor at a discount, and the factor collects from your customer. Factoring removes the receivable from your books; AR financing does not.
Will my customers know I am using AR financing?
It depends on the facility. Some AR loans are structured confidentially — your customers send payment to you as usual. Factoring typically involves a notice to your customers directing payment to the factor. Confirm with the lender how collections are handled before signing.
What receivables do not qualify for AR financing?
Receivables over 90 days past due, receivables from related parties, government invoices subject to assignment restrictions, and receivables concentrated above a debtor limit (often 20–25% of total AR) are commonly excluded. The lender calculates an 'eligible receivables' amount based on these criteria.
How much does AR financing cost?
AR lines of credit carry rates comparable to other secured business credit, typically prime plus a margin. Factoring fees range from 1–5% of the invoice face value per 30-day period, depending on the factor, invoice size, and customer creditworthiness. Factoring is often more expensive than AR lines on an annualized basis.
Related Categories
Page last updated: August 2026