What does it mean to sell accounts receivable?

Selling accounts receivable, also known as invoice factoring, is when a business sells its unpaid invoices to a factoring company in exchange for immediate cash, helping improve cash flow without taking on debt.

How does selling accounts receivable work?

Once you submit invoices to a factoring company, they advance a percentage of the invoice value, usually 70–90%, minus fees. When your customer pays the invoice, the factoring company releases the remaining balance.

Who can benefit from selling accounts receivable?

Businesses that experience slow-paying clients, need fast cash for operations, or want to avoid taking on debt can benefit from selling accounts receivable, including staffing agencies, trucking companies, and construction firms.

What are the pros and cons of selling accounts receivable?

Pros include immediate cash flow, flexibility, and avoiding debt. Cons may include fees, reliance on factoring company policies, and potential impact on customer relationships.

How do I choose the right factoring company?

Look for flexibility, no long-term contracts, transparent fees, and a company that understands your industry. AFS, for example, offers no minimums, no long-term contracts, and flexible programs tailored to your business.

Is selling accounts receivable considered a loan?

No, selling accounts receivable is not a loan. It is the sale of an asset (your invoices), so it does not create debt on your balance sheet.

Will selling accounts receivable affect my customers?

Factoring companies typically handle collections professionally, so your customers may not even notice the process. Choosing a reputable factoring partner helps maintain strong customer relationships.

Need Fast Cash Flow? Here’s How to Know if Selling Accounts Receivable Is Right for You.

There’s a lot that goes into running a business—but if there’s one thing you can’t afford to ignore, it’s cash flow. If your business needs working capital, selling your accounts receivable may be a smart option. Like any important decision, it’s crucial to understand the pros and cons; ultimately, you can decide whether invoice factoring is right for you.

In this article, we’ll break down how selling accounts receivable works, explain when it makes sense, and then highlight what to consider when choosing a factoring partner like AFS.

The Cash Flow Challenge: Extended Payment Terms

If your business sells to large commercial clients, you’ve likely had to offer extended payment terms—30, 60, even 90 days or more in industries like oil and gas. That waiting game can put serious strain on your cash flow.

According to recent data, 73% of small and mid-sized businesses are affected by late payments or stretched-out terms. Even worse, about 40% say it puts them at risk of shutting down. Meanwhile, while you’re waiting to get paid, your financial obligations don’t stop:

You still need to make payroll
Hire new team members
Buy inventory or maintain equipment
Pay vendors, subscriptions, and utilities

And if you want to grow? You might need to:

Take on bigger contracts
Improve your balance sheet to attract investors

The cost of collections adds up quickly—and those early payment discounts? You can forget about those if your money is tied up in unpaid invoices. For many businesses, this creates a major cash crunch.

Why Traditional Financing Doesn’t Always Work for Cash Flow

Even if you’re running a healthy business, securing traditional funding can feel like hitting a brick wall. Here’s why:

Time in business: Banks typically want a few years of financials before approving funding.
Slow approval processes: Opportunities move fast, but traditional loans often move slow. That’s a problem when you need capital now.
Collateral requirements: Some options come with high risk—putting up assets or giving up equity.
Paperwork overload: Loans often involve mountains of forms and red tape.

In fact, only 48% of small businesses fully meet their financing needs—and that includes those that didn’t even try to get funding. The rest are left looking for alternatives.

Selling Accounts Receivable: A Faster, Flexible Solution

Selling receivables, also known as invoice factoring, is an alternative financing method. Put simply, it gives you access to the cash you’ve already earned.

Here’s how it works: You sell your unpaid invoices to a third-party factoring company like AFS. In return, you receive a cash advance—often up to the full value of the invoice, minus a small fee. The factoring company then collects payment directly from your customer, based on the original terms.

It’s fast. It’s flexible. And it helps you stay in control of your business.

How It Works with AFS

At AFS, we’ve designed our invoice factoring process to be simple, transparent, and fast—so you can stay focused on running your business, not chasing down payments.

Here’s what the process typically looks like:

Submit Your Invoice
You send us a copy of your outstanding invoice. We verify the details and work with your customer to set up payment redirection.
Get Your Advance
Once approved, we send you a cash advance—often up to 90% of the invoice value—minus our fee.
Customer Pays AFS
Your customer pays AFS directly based on the agreed terms. You don’t have to worry about follow-ups or collections.
Repeat as Needed
Need more capital? You can continue submitting invoices for funding as your business grows.

Why Businesses Choose to Sell Accounts Receivable with AFS to Boost Cash Flow

Here are the top reasons clients choose invoice factoring with AFS:

Quick Access to Working Capital

No lengthy loan approvals or weeks of waiting. Get fast funding based on the value of your invoices—often within 24–48 hours.

Flexible and On-Demand

Only fund the invoices you want, when you want. There are no long-term commitments or monthly minimums, so you stay in control.

No Debt, No Dilution

Unlike a loan, factoring doesn’t add debt to your balance sheet. You also keep full ownership of your business—no giving up equity.

Simple, Hassle-Free Process

We focus on your customers’ credit, not yours, which means fewer barriers to approval.

Is Selling Your Receivables Right for You?

If you’re tired of waiting 30, 60, or 90 days to get paid, or if you’re struggling with slow-paying customers and missed opportunities, invoice factoring may be the answer.

At AFS, we specialize in helping businesses like yours turn unpaid invoices into the working capital you need to grow—without the headaches of traditional financing.

Ready to unlock cash flow and get back to business?
Let’s talk about how AFS can help.

Anna Aeschliman

Anna Aeschliman is the Director of Growth at AFS, where she helps businesses scale smarter through factoring and strategic funding solutions. A Kansas City native with over seven years in the industry, she holds a Marketing degree from the University of Kansas.