Comparing Accounts Receivable Finance to Factoring

Volatility in the current business climate has finance executives performing stress tests on cash forecasting. What happens if 20 or 30 percent of a company’s receivables aren’t getting paid? Even prior to the global health crisis, 78 percent of accounts payable departments admitted to paying invoices late. As economic uncertainty drags into 2021, many companies face a cash flow crunch.

New demand for liquidity is driving greater curiosity around accounts receivable finance. Accounts receivable finance unlocks working capital by allowing companies to sell their customer invoices to banks and other funding sources for faster payment. In turn, companies improve cash flow and minimize the need to turn to more expensive sources of liquidity.

One of the most common types of accounts receivable finance is factoring. With traditional factoring, a business sells its accounts receivable to a third-party, usually a bank. While the business is given immediate access to liquidity, it receives far less access to the full amount of the receivable sold than other forms of receivables monetization. For example, a company will receive early payment for 85 percent of the customer invoice amount (minus various fees) from the funder – then the remaining 15 percent will be paid once the customer has paid the funder.

There are additional downsides to traditional factoring. Not only are the fees charged by the factoring company expensive compared to other financing options, the factoring company is also significantly involved in the commercial relationship. Credit lines are typically smaller, resulting in a higher cost of funding for less liquidity. While companies can select which customers they would like to bring into the factoring program, generally all invoices for that customer must be sold. These drawbacks, coupled with the fact that a portion of the purchase price is deferred and paid at the time of invoice maturity, means traditional factoring transactions have a greater risk of being recorded on the company’s balance sheet as debt. If this happens, it can negatively impact the business’s debt-to-equity ratio and credit rating, which can then jeopardize the quality and cost of its broader funding mix.

Is there a better form of accounts receivable finance?

The downsides point to an important question – is traditional factoring worth it? Given its limitations, is it capable of solving the scale and scope of current liquidity requirements? In the current economic climate, the answer may be “no.”

Selective receivables finance is an alternative form of factoring that offers all the benefits of traditional factoring with more competitive pricing and flexibility – without heavy involvement (if any at all) from the factor. It allows companies to sell their accounts receivable with their largest, most creditworthy customers for immediate payment. Even further, the company can pick and choose which individual receivables to sell and secure funding for the invoice amount minus nominal financing fees. Not only does this provide more flexibility, but it also facilitates a more strategic, targeted approach which delivers more value. Financing rates are often much more competitive than other options as they’re based on both the company’s financial performance as well as the customer’s (the obligor’s) credit rating. Because it is considered a true sale of receivables, these transactions do not count as debt on the balance sheet.

There are numerous benefits of selective receivables finance over factoring (and other forms of accounts receivable finance). We dive into greater detail in this white paper for anyone that wants to learn more about accounts receivable finance, but here are some key advantages to consider:

  • Greater flexibility and control, competitive cost. Unlike other forms of accounts receivable finance, selective receivables finance allows you to choose which receivables to submit for early payment based on your unique business needs. It typically targets your largest customers so you can receive more liquidity, faster. Because it takes the customer’s credit rating into consideration, interest rates and financing fees are generally much more competitive than other solutions.
  • Mid-market friendly. Selective receivables finance is a great alternative for mid-market companies who may not have the leverage or credit rating to secure other financing options like commercial or asset-based lending.
  • It doesn’t count as debt. With the proper accounting treatment, selective receivables finance transactions do not count as debt on the balance sheet.

As industries grapple with unprecedented volatility, PrimeRevenue is seeing a strong uptick in demand for selective receivables finance – particularly among companies with a strong need to accelerate cash flow, but few options that aren’t extremely expensive or debt. Today, our selective receivables finance solution processes more than $60B in accounts receivable annually across 100 sellers with more than 400 obligors. Compared to other accounts receivable finance options, selective receivables finance delivers the biggest gains in cash flow efficiency at a competitive cost and lower risk. That’s critical right now as companies broaden their liquidity options and strengthen their ability to weather volatility.

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Stephanie Wargo

VP, Global Head of Marketing

Stephanie joined PrimeRevenue in 2015 and oversees the company’s global marketing team and strategy. With a data-driven approach, Stephanie focuses on demand generation and thought leadership to drive brand awareness, strengthen client/partner relationships, and generate new sales opportunities. Stephanie has guided PrimeRevenue through new technology releases and an evolving FinTech landscape. In addition to leading PrimeRevenue’s internal and external communications, she implemented innovative demand generation and marketing strategies to enhance the company’s overall sales pipeline.

Stephanie has extensive experience in marketing and customer success. She previously served as Vice President of Marketing and Communications at BitPay and Vice President of Client Relations and Marketing at FirstView Financial. Stephanie earned a B.A. degree in Political Science from Agnes Scott College in Decatur, Georgia.

Brian Medley

VP, Global Head of Sales

Brian joined PrimeRevenue in early 2012, after more than 20 years of sales leadership, executive-level consultant and business growth experience. As VP, Global Head of Sales, Brian leads a growing team of fintech sales professionals with a focus on developing strong customer relationships, improving sales predictability and helping PrimeRevenue enter the lucrative mid-market.

Prior to PrimeRevenue, Brian honed his enterprise software sales leadership skills at Clarus Corporation. He also served as an operations and IT management consultant for Kurt Salmon Associates. In addition to his sales and consulting background, Brian has deep experience in the financial industry having founded a successful residential mortgage broker and lending business. He is a graduate of the Georgia Institute of Technology having earned a B.S. in Industrial Engineering and Economics and M.B.A. in Global Business.

Jason Green

SVP, Global Customer Success

Jason joined PrimeRevenue in 2021 following more than two decades in the fintech/financial services industry. He brings a strong background is sales leadership due to his impressive relationship building capability as well as a successful track record in creating structure and process improvements. In his role, Jason uses his keen attention to detail to strengthen the customer experience and enhance the company’s solutions to deliver more value to clients.

Prior to joining the company, Jason held several senior level and executive roles with a focus on building and scaling sales and support organizations at both large and small companies. Jason graduated from Murray State University with a B.S in Marketing.

Matt Ford

SVP, Global Product Innovation

Matt joined PrimeRevenue in early 2015 and is responsible for overseeing all commercial, strategic and operational aspects of PrimeRevenue’s supply chain finance offerings throughout EMEA, based in Prague. He has been instrumental in gaining global alignment and developing supplier enablement processes for the region.

Matt joined PrimeRevenue following a 15-year career at Morgan Stanley, where he worked in fixed income operations covering debt syndication through bonds, EMTNS, corporate loans and other debt securitization. Notably, he set up non-core location operations in Europe (Budapest) and all lending operations in Baltimore from scratch.

Matt, who was born and raised in South East England, earned a B.S. in Sports Science at University of Teesside where he mastered the art of TEAM development and accountability as a youth international rugby player.

Dominic Capolongo

EVP, Global Head of Funding

Dominic joined PrimeRevenue in 2016, and is responsible for leading our bank and capital markets funding strategies and execution. He focuses on building global, scalable and highly efficient funding structures that maximize options for supporting PrimeRevenue’s programs. Dominic began his career as an attorney and was a partner with Kaye Scholer before joining DLJ as a senior banker. Dominic brings tremendous strategic and capital markets experience in all areas of finance having held senior positions at, among others, Credit Suisse and RBC Capital Markets in addition to DLJ. Dominic earned a JD from Fordham University School of Law and a BA from SUNY Binghamton.

Gavin Cicchinelli

Chief Operating Officer

Gavin joined PrimeRevenue as Chief Operating Officer in 2021. With more than two decades of leadership and executive experience along with a deep understanding of the payments space, Gavin provides a unique focus on improving and strengthening operational strategies and implementing GTM growth execution. He is responsible for leading transformation across corporate and operational strategies as well as building a repeatable and scalable commercial growth strategy that aligns with PrimeRevenue’s core business while delivering key adjacent growth opportunities.

Prior to joining PrimeRevenue, Gavin served as President and Chief Revenue Officer of Integrated Solutions at TSYS, a global payment processing services company acquired by Global Payments (NYSE:GPN). There, he also served as Head of Product and divisional COO. Throughout his career, Gavin has held multiple leadership positions including VP of Sales, SVP of Business Development, and President of Financial Institutions. Gavin graduated from the University of Northern Colorado, Greeley.

David Quillian

Chief Legal Officer

David joined PrimeRevenue as General Counsel in 2007. He and his team have been instrumental in successfully creating the unique legal structures that support PrimeRevenue’s multi-funder model and global funding capabilities. David is also the lead named inventor on PrimeRevenue’s two patents for Electronic Time Drafts, which allow PrimeRevenue to manage supply chain finance programs using electronic negotiable instruments as opposed to accounts receivable. Prior to PrimeRevenue, David was General Counsel at Harbor Payments, which was acquired by American Express (AXP) in 2006, and Magnet Communications, which was acquired by Digital Insight (DGIN) in 2003. He holds degrees in Economics and History from Duke University, and Juris Doctor and M.B.A. degrees from the University of Georgia.

Nathan Feather


Nathan has successfully ushered PrimeRevenue from our very early days as a visionary startup, through the financial crisis to today’s position as a thriving mid-sized leader in the cloud-enabled supply chain finance marketplace since joining PrimeRevenue in January 2006. He was instrumental in recapitalizing the company with an $80M investment led by BBH Capital Partners in 2015. Prior to PrimeRevenue, he held various financial management roles with Ariba, Freemarkets and PriceWaterhouseCoopers. Nathan holds a BS in Accounting from Pennsylvania State University.

PJ Bain


PJ has an impressive and accomplished track record as an enterprise software entrepreneur and executive. PJ has built a solid record of success with PrimeRevenue since being appointed Chief Executive Officer in July of 2009. The company has received numerous awards for growth, customer service, innovation, along with being recognized as a top employer.

PJ is a life-long software and technology entrepreneur having been involved in numerous firms in the roles of founder, executive, advisor and investor. Immediately prior to PrimeRevenue, PJ was the VP and General Manager of Exact Holding N.V. (NYSE/AMS: EXACT), a leading global provider of business software solutions. He was previously Founder and CEO of Inspired Solutions, an Atlanta-based, B2B software and services firm that grew to be the largest reseller of Exact Software in North America, later acquired by Exact. PJ holds a Bachelor of Industrial Engineering from Georgia Institute of Technology.