Receivables Financing or “invoice factoring“ is a great way to get money for your business. Accounts receivable financing is not a loan; it’s an advance against your client invoices. You are selling your outstanding invoices to a factoring company who then gives you back up to 80% of the invoice value in the form of a loan against those invoices. The remainder due is remitted to you once the invoice is paid.
Check this Video that will clearly explain A/R Financing!
Receivable Financing is mainly used to generate immediate cash flow for the business selling the accounts receivable. This is a great funding option as it provides an immediate advance of cash to you, leveraging your outstanding invoices.
This means as your business grows so does the amount of funding you will qualify for so you can meet increasing cash flow demands. Most major companies including major Fortune 500 companies utilize some form of Accounts Receivable Financing.
One of the best benefits of receivable financing is giving your business an increase in working capital without needing to borrow money or tie up your business or personal assets. This boost to your cash flow positively impacts your profitability.
You can receive money quickly, typically within 24 hours from approval. This is much faster than if you were trying to collect on the invoices on your own and wait for that money.
Prior to purchasing your invoices, a factor conducts a credit analysis on the client you are invoicing to determine their risk or repaying the invoice. You are entitled to the resulting analysis, which is a huge benefit as it can assist you in your future business dealings with that client.
Another big benefit of Receivable Financing is that you are not obtaining a loan. The cash advanced is based on your client’s credit status, not yours making it easier to qualify for. You may qualify for factoring even if you are a new company without an established track record, have a tax lien, or even declared bankruptcy.
Accounts Receivable Financing really boosts your cash flow by providing an immediate advance of cash into your business against the value of your outstanding invoices.
Call me today to be find out more about building a Business Credit Profile so you can access funding with no personal guaranty.