When customers take 60, 90, or even 120 days to pay their invoices, your cash flow can quickly tighten, even if business is booming. High receivables aging ties up working capital you need for payroll, inventory, and new opportunities. Funding options like invoice factoring and spot factoring can turn those unpaid invoices into immediate cash, helping your business stay liquid and growth ready.
Why Does High Receivables Aging Hurt Cash Flow?
When too much of your capital is locked up in unpaid invoices, it can create serious strain on your cash flow. Slow-paying customers make it harder to cover daily expenses, pay employees on time, or reinvest in growth opportunities. Unfortunately, traditional bank loans aren’t always the answer – lenders often view aged receivables as risky collateral and take weeks or months to approve funding. For many businesses, that delay is simply too long. That’s why more companies are turning to flexible financing solutions that bridge the gap between invoicing and payment.
Best Funding Solutions for Businesses with High Receivables Aging
When cash is tied in slow-paying invoices, businesses need flexible funding that bridges the gap without adding long-term debt. Here are three reliable options that help unlock working capital.
Invoice Factoring
Invoice factoring allows you to sell your outstanding invoices to a funding partner for immediate cash, typically advancing up to 90% of the invoice value within 24-48 hours. It’s ideal for businesses with extended payment cycles because it eliminates the waiting period between invoicing and getting paid, keeping operations and payroll on track.
Spot Factoring
Spot factoring is a one-time or single-invoice funding option designed for businesses that need quick relief without a long-term contract. It’s perfect for covering temporary cash-flow gaps, urgent expenses or seasonal slowdowns, and providing flexibility on your terms.
Asset-Based Lending (ABL)
Asset-based lending uses receivables, inventory or other assets as collateral to secure a revolving line of credit. This option is best suited for companies with high accounts receivable balances or growing sales that need continuous access to working capital without relying solely on customer payments.
How to Manage and Reduce Receivables Aging
While funding can solve immediate cash flow problems, improving how you manage receivables helps prevent delays in the long term. Start by streamlining your invoicing process, sending invoices promptly and double-check for accuracy to avoid disputes or slow approvals.
Encourage faster payments by offering small early payment discounts or using automated reminders to follow up on outstanding balances. It also helps to review your customers’ payment histories regularly and tighten credit terms for those who consistently pay late.
Finally, pair strong accounts receivable management with reliable funding support. By combining better A/R practices with solutions like factoring, you can keep cash flow steady while maintaining healthy customer relationships.
Key Takeaways
When customers take 60 – 90+ days to pay, cash flow slows, making it difficult for businesses to cover expenses or tackle new opportunities. High receivables aging ties up working capital and traditional banks often won’t lend against aged invoices.
Alternative funding options like invoice factoring, spot factoring and asset-based lending (ABL) give businesses faster access to cash by leveraging their receivables. Factoring provides up to 90% advances within 24-48 hours, while spot factoring offers one-off flexibility for occasional gaps. ABL allows companies to use their receivables and inventory as collateral for ongoing credit.
Alongside funding, businesses can reduce aging by improving invoicing accuracy, offering early payment incentives, tightening credit terms, and using automated reminders.
CapFlow Funding Group specializes in helping businesses bridge cash-flow gaps quickly, with facilities from $25K to $5M, rapid turnaround times and expertise across industries like construction, staffing, manufacturing, and logistics. With transparent terms and flexible solutions like FactorLOC, CapFlow helps companies stay liquid and growth ready.
