A distribution business holding $1.2M in unpaid retailer invoices gets roughly $1M of it advanced in about two days through an accounts receivable facility, and the retailers never know. The facility advances around 85 percent of eligible net-30 to net-90 invoices, holds the balance as a reserve, and releases the reserve minus the fee when the retailer pays. It revolves: every new invoice you bill becomes new availability, so a distributor doing $8M to $10M a year with 60-day terms is running a $1M to $1.5M line that refills itself every cycle. Non-notification keeps the retailer paying into an account in your name. Non-recourse puts the retailer's credit risk on the facility instead of on you. And the underwriting is on the retailers' credit, not yours, which is why a distributor whose bank capped the line at $300K gets $1M here off the same invoices.
Here's the shape of it on a real file. A distributor doing $24M with 60 percent of revenue from three big retailers had the same problem at larger scale: the retailers paid in 60 days, the suppliers wanted paying in 30, and the gap was the biggest number on the balance sheet. A $2.8M A/R facility advanced against those three retailers' invoices as they were billed, in days, with the retailers none the wiser. The concentration that made a bank nervous (three customers, 60 percent) is what made the facility easy, because those three retailers are the ones whose credit the facility underwrites, and their credit is excellent. The distributor stopped turning down orders it couldn't float.
what net-60 retailer invoices advance at through an A/R facility, revolving as new invoices bill, retailers never notified
— ~85% advance on eligible receivables, per the A/R product canon; funded in as little as 2 days once the aging report and customer list are in
Who Actually Buys the Invoices
Nobody buys them, in the way the question usually means. There are two different products and they get confused all the time.
Traditional factoring sells the invoice. The factor takes it over, notifies your retailer to pay the factor directly, charges a fee per cycle, and usually keeps full recourse to you if the retailer doesn't pay. It's built for the one-off invoice and it's the version that gives receivables financing its reputation.
An A/R facility lends against the invoices and leaves them yours. The retailer keeps paying you, into a controlled account. The facility advances as you bill, releases the reserve as you collect, and prices as asset-secured credit, which lands well below what a factor charges per cycle because the lender's risk is the retailer's credit, not yours. Non-recourse is available for a bit more, and it means a retailer bankruptcy is the facility's problem. A/R financing vs. a line of credit walks the difference in detail; invoice factoring is the product page, and it covers both.
What you get out of choosing the facility over the factor: the retailers never see a change, the fee is lower, the line grows with your billing instead of being re-sold invoice by invoice, and you keep the relationships.
Bottom line:
$1.2M of retailer invoices is a $1M revolving line underwritten on the retailers' credit, funded in days, invisible to the retailers. The bank sized you on your balance sheet. The facility sizes you on theirs.
How the Facility Is Sized
Eligible receivables. Invoices to creditworthy commercial customers, inside terms (net-30 to net-90), not disputed, not more than 90 days past invoice date. Big-box retailers, grocery chains, and regional distributors are the easiest paper there is. Consumer invoices and anything past 90 days drop out.
Advance rate. Around 85 percent on retailer receivables; higher on government and investment-grade paper, a little lower on concentrated or slower-paying accounts. On $1.2M eligible, call it $1M.
Concentration. A bank treats three customers at 60 percent of revenue as a risk. The facility treats it as three credit reports it already has. Concentration in good retailers helps.
Your file. Four months of business bank statements, your A/R and A/P aging, and the customer list. Six months operating. No tax return needed to start, and a personal guarantee is the exception, not the baseline, because the invoices are the collateral.
What the $1M Is Really For
It isn't for carrying the retailers. It's for the order you're about to turn down. A distributor with $1M of availability says yes to the big-box opening order, pays the supplier on its net-30, and collects on the retailer's net-60 without the gap landing on the operating account. The facility doesn't cost you the margin on that order. Turning the order down does.
See what your receivables advance at.
Start Your Funding Request →The Facility Inside the Bigger Picture
Receivables are one layer. The distributor who's growing usually has two others. Inventory that has to be bought before it's sold funds on inventory financing, sized to the goods. The warehouse funds on owner-occupied real estate; a Dallas distributor bought its $3.2M warehouse in 28 days on the business's revenue. Each layer goes to the lender that prices it, on one application, which is the capital stacking the wholesale hub is built around. Distributors in Texas and Florida send us the receivables version of this every week.
| What's tied up | What funds it | Sized to | Speed |
|---|---|---|---|
| $1.2M in retailer invoices | A/R facility, ~$1M revolving | The retailers' credit | ~2 days |
| Next quarter's inventory | Inventory financing | The goods | Days |
| The warehouse | Owner-occupied CRE | The business's revenue | Weeks |
Here's What Most People Get Wrong
They sell the invoices to a factor because that's the first result they find, notify their three best retailers, and pay a per-cycle fee that eats the margin on exactly the accounts they can't afford to lose. Or they take a merchant cash advance against daily deposits to cover a 60-day gap, which is the single most expensive way to fund receivables that are already earned. Or they let the bank size the whole business to the balance sheet and keep turning down the orders that would have grown it. The receivables are the asset. Finance them as the asset, on the retailers' credit, and keep the relationship.
See what the $1.2M advances at
One application, one soft pull, the aging report, and the customer list. Advances in about two days, retailers never notified.
Frequently Asked Questions
Who buys a distributor's unpaid retailer invoices?
A traditional factor buys them outright and notifies the retailer. An accounts receivable facility lends against them instead, around 85 percent of eligible invoices, revolving as you bill, with the retailer still paying you. The facility is cheaper per cycle, invisible to the retailer, and grows with your billing, which is why most distributors above $250K in receivables use it instead of selling the paper.
How much cash can a distributor get against $1.2M in receivables?
Roughly $1M, at an advance rate around 85 percent of eligible net-30 to net-90 invoices to creditworthy retailers. The remaining balance is held as a reserve and released, minus the fee, when the retailer pays. Government and investment-grade receivables advance higher.
What does receivables financing cost compared to factoring?
An A/R facility is priced as asset-secured credit, which lands well below a factor's per-cycle fee and far below a merchant cash advance. The exact pricing comes on the term sheet the application produces, because it depends on the retailers' credit, the terms, and the concentration. The facility, not the factor, is the version that keeps the margin on your best accounts.
Will my retailers know I'm financing their invoices?
Not with a non-notification facility. The retailer keeps paying into an account in your name; the facility sits behind it. Traditional factoring notifies the customer. The product page covers both options.
How fast does an A/R facility fund for a distributor?
As little as two days once the A/R aging report and the customer list are in. After the facility is open, each new invoice advances as it's billed.
Does customer concentration hurt a receivables facility?
Not when the concentrated customers are creditworthy retailers. The facility underwrites their credit, so three big-box accounts at 60 percent of revenue is a strong file, not a weak one. A bank reads the same concentration as risk; the facility reads it as collateral.
Bobby's Take
The $1.2M question comes in as "who buys invoices," and the first thing I tell a distributor is: don't sell them. You've already done the hard part, which is landing retailers whose credit is better than yours. Finance the invoices on their credit, keep them paying you, and stop treating a 60-day gap as a reason to turn down a 20 percent bigger order. The distributors that outgrow their bank aren't the ones with the best balance sheet. They're the ones who figured out their receivables were the balance sheet.
