Accounts Receivable Financing for Contractors

What Is Accounts Receivable Financing?

Accounts receivable (AR) financing is a method of unlocking the cash value tied up in unpaid invoices or contract receivables. For construction subcontractors, this means converting your earned but unpaid subcontract value into immediate working capital — without waiting for the general contractor's payment cycle to run its course.

In standard AR financing, a company's outstanding invoices are used as collateral or sold outright to a financing company. The contractor receives a percentage of the receivable value upfront and the remainder (minus fees) when the invoice is paid.

At Alamo ACS, we use a Receivable Purchase Agreement — a clean asset sale rather than a collateralized loan. You sell us your earned receivable. We pay you now. We collect from the GC when they pay. No debt, no repayment obligation on your end.

Why Contractors Use AR Financing

Construction subcontractors are structurally underpaid throughout a project. You front the cost of labor and materials well before you see the first dollar from a pay application. GCs often delay payment 30 to 90 days — and sometimes longer.

That gap destroys cash flow. It limits how many jobs you can run simultaneously, forces you to turn down contracts you could otherwise win, and puts you in the position of floating project costs with personal funds or high-interest lines of credit.

AR financing closes that gap. When your receivable is funded, you have the capital to operate the project properly — which means better performance, fewer delays, and the ability to take on more work.

How AR Financing Works at Alamo ACS

• You submit your signed subcontract and project documentation
• We review the project, GC, and contract terms — decision in days
• We purchase your receivable and begin advancing funds
• Advances are milestone-based or bi-weekly tied to verified progress
• We collect from the GC directly — that's our responsibility now
• No repayment from you, regardless of GC payment timing

AR Financing vs. a Line of Credit

A business line of credit requires a banking relationship, clean credit history, and often collateral. It also shows as debt on your balance sheet and comes with interest obligations from day one — whether you use it or not.

AR financing through a Receivable Purchase Agreement doesn't add debt to your books. It's a sale transaction. Your balance sheet stays clean, and the capital you receive is tied directly to a specific project's earned value — not a general borrowing limit that can be called or reduced at the bank's discretion.

For subcontractors running multiple projects, this distinction matters when bonding companies, GCs, and suppliers look at your financials.

Who Qualifies

• Licensed Texas subcontractor with a signed subcontract
• Active project with a verifiable GC
• Project value of $25,000 or more
• Active general liability insurance
• Residential, commercial, or government work