Companies experience lots of challenges as the business owners struggle to stay afloat in a consistently changing environment. As the market continues to transform, however, entrepreneurs should take some steps to be certain that their workers and customers are satisfied. And for the expansion purposes, one remarkable way of financing is accounts receivable financing. This process of selling accounts receivable on the way to get quick cash help entrepreneurs to make the changes that are necessary to stay up and working and for instances when cash flow is tight.

As an owner of a small business, you possibly know how difficult it can be to acquire working capital to finance the expansion of your small business or cover the payments throughout sporadic cash flow shortages. Lots of small business owners possibly come across situations where conventional financing, such as small business loans or business lines of credit will not be available or not enough. At situations like these, some business owners go for a different financing option to finance their business, that’s called “accounts receivable financing”.

How Accounts Receivable Financing Work?

Accounts receivable is a financing process in which companies sell their receivables or outstanding invoices at a discount to a factoring company that will consider the risk on the receivables and in exchange will provide quick cash infusion into your business. Rather than getting compensated the total value of the invoice, your small business gets instant cash payment by selling the rights to be compensated by the company or person that you invoiced.

When To Apply For Accounts Receivable Financing?

One of the major reasons that companies prefer to get accounts receivable financing is easy and quick access to cash. The need to pay suppliers or to meet the payroll is some of the major reasons that a company may opt for this financing program. Typically those business owners use the cash that they get from their customers, however when the payments are late for just about any reason, the company may be stuck in a difficult or embarrassing situation. When quick finances are imperative and getting a loan from a conventional source is difficult, then accounts receivable financing might be the most excellent option.

One more remarkable thing about accounts receivable financing is that new or small businesses can free up lots of their existing working capital. Many companies maintain a full-size inventory and a bigger portion of that business working capital gets tied up in that inventory. For the struggling businesses, instead of decreasing the quantity of inventory, cash can be accessible with accounts receivable financing. Are you looking for some cash to hire an employee to convert that stock into sales? Quick funding is the solution for your situation. 

There are quite a lot of benefits of accounts receivable financing. To practically understand those benefits, however, the first thing you need to do is to fully understand the financing process and find that will this financing program help your specific situation?

There actually are many benefits of accounts receivable financing.  See if any of these could help your business: 

Benefits Of Accounts Receivable Financing

  • Total customization and management options
  • Funding in just 24 hours
  • Advance rates up to 100%
  • Fees as low as 1.5%
  • Daily release of your collected reserves
  • Gives you the ability to develop your line of credit to $10 Million
  • Competitive rates
  • Recourse & non-recourse financing programs
  • Improve cash flow
  • Increase sales and production
  • Improve business credit rating

All businesses, no matter large or small, need quick access to funds with the aim to finance their inventory, cover daily operational expenses and meet payrolls. And all companies can have instances where they need quick cash. In case your business is experiencing issues getting approved for conventional type of financing, accounts receivable financing is probably an option that will best fit your business unique requirements. It is also recommended to be aware of different expenses, the risks involved and the possible shortcomings of any financing program before applying.