The 4 Best Things About Accounts Receiveable Financing
Many business owners forgo using accounts receivable financing because they have an incorrect understanding of it.
Below are four benefits of this type of financing that all business owners should consider.
Accounts Receivable Financing Provides You with Fast Cash
One of the downsides of operating a business is that accounts receivable can be unpredictable. That leaves you without the funds you need to meet payroll and other expenses, not to mention pursue business growth. Factoring is a fast way to get the money you need using one or more of your company’s outstanding invoices as collateral.
Ideal Alternative When You Can’t Obtain Traditional Financing
If you are new in business or run a very small company, it can be difficult to get a loan with a bank or credit union. Accounts receivable financing is based on the credit worthiness of the customer with an outstanding invoice and not your own. You simply pay a small advance fee to receive full payment of the invoice right away.
Provide Your Own Customers with Better Credit Terms
Knowing that you can rely on factoring to get much-needed cash makes it easier to give your customers a longer time to pay. This is especially important in the early days when your business doesn’t have an established reputation.
The accounts receivable financing company you work with will investigate your customer’s credit, which means you should select those with the highest invoices and most timely payment history.
Focus on Growth, Not Just Survival
The cash owed to your company in unpaid invoices might look good on a spreadsheet, but it does you no good until you collect it.
Invoice factoring provides immediate cash to help keep the bills paid while you seek to grow your business at the same time. It is often an ideal solution for new business owners with big dreams but small budgets.