Accounts Receivable Funding
You have a growing business that is having cash flow problems. You have excellent customers but they pay your invoices in 15 days or more. If you have the cash earlier you could take care of your business expenses, take advantage of supplier discounts for early payment and discounts for volume purchases. You would be able to fulfill orders quicker, increase production and sales which increases profits.
Accounts receivable funding is the selling of interest in your invoices or receivables to a private investor, or factor, at a small discount. Accounts Receivable (A/R) funding provides over $200 billion dollars to the Industry each year. In fact, factoring is a centuries old financial services used by multi-billion dollar corporations that is now available to smaller sized businesses, to whom the banks are usually reluctant to lend funds. Receivables financing fills a tremendous void.
The invoices to your customers for goods delivered or services rendered can be converted into a "Credit Line" from which you may draw cash to better manage your business. Draw only as much as you need and pay only for what you use. Advance funding is a tool that you can use to:
We help you manage your cash flow by getting you your money now; and creating a line of credit based on your receivables rather than waiting 30, 45 or 60 days. Your suppliers get paid quickly, so that you can negotiate the best pricing. In many instances, the ability to take discounts and get better pricing will make up for the cost of factoring.
While factoring can certainly benefit businesses with cash flow needs, there are reasons why a business owner should consider factoring:
- You can't qualify for a bank loan if your business is less than two years old, you have a blemish in your credit or once filed for bankruptcy.
- Your receivables volume is too low for the vast amount of larger factoring companies who buy accounts receivables.
- Your business has no collateral.
Accounts receivable funding is the selling of interest in your invoices or receivables to a private investor, or factor, at a small discount. Accounts Receivable (A/R) funding provides over $200 billion dollars to the Industry each year. In fact, factoring is a centuries old financial services used by multi-billion dollar corporations that is now available to smaller sized businesses, to whom the banks are usually reluctant to lend funds. Receivables financing fills a tremendous void.
The invoices to your customers for goods delivered or services rendered can be converted into a "Credit Line" from which you may draw cash to better manage your business. Draw only as much as you need and pay only for what you use. Advance funding is a tool that you can use to:
- Raise capital without creating debt
- Improve the cash flow of your business
- Take advantage of discounts on materials
- Make payroll
- Pay back taxes
- Let someone else handle the collection process
We help you manage your cash flow by getting you your money now; and creating a line of credit based on your receivables rather than waiting 30, 45 or 60 days. Your suppliers get paid quickly, so that you can negotiate the best pricing. In many instances, the ability to take discounts and get better pricing will make up for the cost of factoring.
While factoring can certainly benefit businesses with cash flow needs, there are reasons why a business owner should consider factoring:
- The process is quick. Once the relationship with a factor has been established, funding is often available within 24 hours after invoices are mailed to your customer.
- Factoring is available to most businesses. Your company doesn't have to have excellent credit. The importance of credit lies with your customers and their ability and willingness to pay.
- Eliminate bad debt. A non-recourse factor will assume the risk of bad debt, eliminating this expense from your income statement.
- Invoice processing. Factors handle much of the work associated with processing invoices including posting invoices, depositing and entering checks. This saves time and money for the small business owner.
- Unlimited capital. Factoring is the only source of financing that grows with sales. As your company increases sales, more cash is available through the sale of your receivables.
- Take advantage of early payment discounts and volume discounts.
- Stop offering early payment discounts to customers.
- Don't give up equity or take on any partners. Most other forms of financing require some say as to how the funds are spent. With factoring your receivables, you decide how the money is used.
- Don't incur additional debt. Factoring is not a loan and therefore does not incur additional debt.
- No geographical limits. A factor can work with a client in any part of the country and that client can have customers all over the world.
- Factors can help pre-screen new customers for you. When asking about factoring their invoices, if the customer doesn't meet with the factor approval, you may want to reconsider doing business with that customer.
