Cash flow drives the economy, and nowhere is this more evident than in small businesses. Even profitable companies experience delays waiting for customers to pay invoices, seasonal swings, or project-driven cash gaps. Instead of relying on slow, collateral-heavy bank financing, many turn to a modern alternative: selling a portion of their future receivables.
For investors, this creates an opportunity to earn steady, short-term yield supported by real, verified business revenue. The structure is simple: capital goes out, daily or weekly repayments begin almost immediately, and funds recycle rapidly into new deals.
In other words, investors earn income from the natural heartbeat of Main Street economic activity.
How the Structure Works for Investors
Receivables funding operates as a self-liquidating advance secured by future revenue. The investor provides capital upfront. The business repays a fixed amount through automated daily or weekly transfers tied directly to its cash flow.
What makes this unique:
- Funding decisions are based on real cash flow and verified deposits
- Underwriting relies on actual operating performance, not projections
- Repayments begin immediately after funding
- Capital fully cycles every 4 to 12 months
For investors, this means:
Faster capital turnover → more frequent redeployment → more consistent yield opportunity.
Selling Future Receivables Instead of Borrowing
Accounts Receivable funding is not a loan, it is the sale of future revenue.
The business sells the rights to a small portion of its upcoming receivables at a discount. Repayment adjusts with actual sales, providing flexibility if revenue fluctuates.
Investors benefit because repayment starts immediately, which reduces time at risk and creates a consistent flow of capital that can be reinvested into new opportunities.
Why Businesses Choose AR Funding
Even strong companies can face tight cash cycles. AR funding helps bridge short-term gaps and support operations such as:
- Speed: Access to funds in days, not weeks.
- Flexibility: Use for payroll, inventory, or project costs.
- Predictability: Automated daily or weekly repayments.
- Accessibility: Approval based on real revenue, not just credit score.
- Scalability: As sales grow, funding capacity grows too.
Many studies link poor cash flow management to the majority of small business failures. AR funding directly tackles this challenge by providing liquidity when it is needed most.
How Underwriting Protects Investors
Each deal begins with one key question: Can this business support frequent repayment from its current cash flow?
Underwriters review:
- Verified deposits and cash flow consistency
- Average daily balances and recent revenue trends
- Business tenure and management background
- Industry type and geographic risk
- Purpose of funds and repayment source
Well-designed underwriting relies on real, verifiable data rather than projections. Funds typically diversify across many businesses and industries, ensuring no single deal dominates the portfolio.
Historical defaults were cited between 4.5 and 6 percent, and the model was built to withstand up to 25 percent in losses before investor returns would be affected.
What Investors Should Know
For investors, small business receivables funding combines steady yield, liquidity, and diversification.
Key advantages include:
- Monthly cash flow backed by real business activity
- Short durations, often under one year
- Strong alignment since operators earn only after investors are paid
- Diversification across hundreds of businesses
- Over half of our businesses are repeat customers
Income is typically taxed as ordinary income, but many investors view it as a reliable income stream within a balanced portfolio.
Example from the Field
Imagine an HVAC company earning $4 million a year. During summer, demand spikes, but the business must buy materials and pay workers upfront.
By selling $110,000 of its future receivables, it receives immediate working capital. Each day, small automated repayments are pulled from sales until the balance is fully paid over nine months.
The company completes projects faster, boosts revenue, and avoids waiting for clients to pay invoices, while investors receive consistent monthly distributions backed by repayments from many similar businesses.
This model provides short-duration exposure, predictable cash flow, and rapid capital recycling, allowing funds to be redeployed multiple times a year into a diversified pool of businesses.
The Bottom Line
Small Business Accounts Receivable funding is a modern solution to a timeless problem, cash flow delays. It gives businesses access to money they have already earned and provides investors a short-term income strategy tied to real economic activity.
By combining strong underwriting, quick capital turnover, and clear alignment between businesses and investors, this model creates a true win-win.
In a market filled with long holds and uncertain exits, steady cash flow from everyday small businesses offers both stability and opportunity.
If you want to review our current Small Business Receivables investment, view the offering details here.
Connect with Us: Contact Timberview Capital