How do I finance invoices my customers have not paid yet?

Two main routes: factoring, which purchases invoices as you issue them and advances typically 70 to 95 percent of face value within a day or two; and asset-based lending, which lends against the receivables pool as revolving availability while you keep collecting. Which fits depends on volume, customer mix, and how much reporting discipline the business can support.

My biggest customer moved me to net 60. What are my options?

Structurally: finance the receivable rather than fight the terms. A receivables facility converts those invoices to cash on issuance, priced against your customer’s credit — which for large slow payers is usually excellent, and prices accordingly. Commercially, some companies also negotiate early-payment discounts; compare that discount against a financing rate before offering it, because 2 percent for 30 days is a steep annualized price.

What does it cost to bridge a receivables gap?

Factoring typically runs 1 to 5 percent of invoice value per 30 days outstanding; asset-based facilities price lower at scale. The comparison that matters is that cost against what the gap is already costing you — missed supplier discounts, overtime from understaffing, growth declined for lack of cash. The gap is never free; it is just usually unpriced.

Do government and institutional receivables qualify?

Yes — slow-paying but highly reliable payers like government agencies and hospital systems are among the strongest receivables collateral, with structure specifics (assignment procedures, net-down on healthcare claims) that specialist funders handle routinely. Reliability is exactly what a funder is buying.

Will borrowing against receivables affect my customer relationships?

Under factoring, customers receive a notice to remit payments to the factor — routine in staffing, transportation, and distribution, and worth discussing where perception is sensitive. Under asset-based lending, collections stay in your name and customers typically see no change. If discretion is the priority, ABL is the structure built for it.

Use case

Receivables timing: the money is earned. It just is not here yet.

You delivered, you invoiced, and now you wait — 30, 60, sometimes 90-plus days while payroll and suppliers keep their own schedule. Receivables-based capital exists to close exactly that gap, against exactly that collateral.

Reviewed by Ryan Hurley, Co-Founder & CEO

Receivables timing problems arise when customer payment terms run longer than a company’s own obligations — net-60 revenue against weekly payroll. The structural fixes borrow against the receivables themselves: invoice factoring converts invoices to cash as they are issued, and asset-based facilities lend a percentage of the whole receivables pool. Both scale with sales, which one-time loans do not.

Good fit

Good customers, slow terms

The invoices are solid and the payers are creditworthy — large customers, institutions, government. The problem is the calendar, not the collectability.

Tradeoff

Timing fixes are not bad-debt fixes

Receivables capital advances against invoices that will pay. Invoices in genuine dispute or default are a collections problem, and no facility converts those.

Review

The gap is a number

Days sales outstanding minus days payable outstanding, times daily revenue — that is the hole in the bank account, and the size of the fix.

The pattern

Slow-paying customers are usually your best customers. That is the trap.

The companies that pay on net 60 and take 75 are rarely the struggling ones — they are the anchor customers: national accounts, hospital systems, general contractors, government agencies. Payment terms are how large organizations manage their working capital, and winning their business means financing it. The bigger the customer you land, the longer you wait, and the more of their working capital you carry.

That reframe matters because it points at the right fix. You cannot collect your way out of a structural gap — dunning calls do not change a Fortune 500 payment policy, and pressing your best customer to pay faster is a strange way to thank them for the business. What you can do is borrow against the certainty of their payment, which is precisely what receivables structures price: your customer’s credit, not your patience.

The gap shows up in recognizable shapes across industries — weekly clinical payroll against hospital system invoices in healthcare staffing, weekly contractor payroll against net-45 client invoices in staffing generally, progress billings and retainage in construction, and 90-plus-day cash conversion cycles in distribution.

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The structures

Three ways to borrow against money you are owed.

Invoice factoring — sell invoices as you issue them; advance typically 70–95 percent within a day or two, remainder minus fee at collection. Fastest to establish, scales automatically with billing, and the factor handles collections. The full mechanics, advance-rate table, and fee anatomy are on the factoring page.
Asset-based lending — a revolving line against the whole receivables pool (often with inventory), with you keeping collections in your name. Cheaper at scale and quieter toward customers; more reporting. The factoring vs. ABL comparison works the decision.
Selective structures — single large invoices or milestone payments financed individually rather than through a standing facility. Useful when the gap is occasional, one big payer, or one big project rather than a way of life.

What generally does not fit: term debt. A loan sized to today’s gap is a fixed answer to a scaling problem — the gap grows with revenue, and the loan does not. And daily-debit advances answer a receivables gap by tightening daily cash flow, which is the original problem wearing a different hat. If the gap recurs, the structure should revolve.

Questions we are asked

Receivables timing, answered directly.

How do I finance invoices my customers have not paid yet?: Two main routes: factoring, which purchases invoices as you issue them and advances typically 70 to 95 percent of face value within a day or two; and asset-based lending, which lends against the receivables pool as revolving availability while you keep collecting. Which fits depends on volume, customer mix, and how much reporting discipline the business can support.
My biggest customer moved me to net 60. What are my options?: Structurally: finance the receivable rather than fight the terms. A receivables facility converts those invoices to cash on issuance, priced against your customer’s credit — which for large slow payers is usually excellent, and prices accordingly. Commercially, some companies also negotiate early-payment discounts; compare that discount against a financing rate before offering it, because 2 percent for 30 days is a steep annualized price.
What does it cost to bridge a receivables gap?: Factoring typically runs 1 to 5 percent of invoice value per 30 days outstanding; asset-based facilities price lower at scale. The comparison that matters is that cost against what the gap is already costing you — missed supplier discounts, overtime from understaffing, growth declined for lack of cash. The gap is never free; it is just usually unpriced.
Do government and institutional receivables qualify?: Yes — slow-paying but highly reliable payers like government agencies and hospital systems are among the strongest receivables collateral, with structure specifics (assignment procedures, net-down on healthcare claims) that specialist funders handle routinely. Reliability is exactly what a funder is buying.
Will borrowing against receivables affect my customer relationships?: Under factoring, customers receive a notice to remit payments to the factor — routine in staffing, transportation, and distribution, and worth discussing where perception is sensitive. Under asset-based lending, collections stay in your name and customers typically see no change. If discretion is the priority, ABL is the structure built for it.

Stop waiting on money you have already earned.

One look at the aging establishes the structure, the advance, and the cost — before anything is signed.

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