When businesses need extra funding to stabilize cash flow and stimulate growth, they frequently look to outside sources. Accounts receivable financing, also known as factoring, allows you to sell your unpaid invoices for a cash advance that you can use to meet your immediate needs. Instead of waiting 30 to 90 days to get paid, you can have the cash at hand almost instantly.
Here are some advantages of this form of funding.
Many startups and small businesses find it difficult to qualify for loans from banks and other traditional lenders. However, your approval for accounts receivable financing is not based on your credit rating or how long you’ve been in business. Instead, it is based on the amount of funds you have in unpaid receivables and in the creditworthiness of your clients. The modest fees involved in factoring make it a desirable option for many small businesses.
Obtain Funds Quickly
Sometimes the urgency of immediate expenses makes waiting for slow-paying customers to honor their invoices problematic. With accounts receivable financing, you can have the funds you need quickly. After a three to five day application process, you receive the funds you need within a day or two.
Help Your Company Prosper
By unlocking the funds that are dormant in your unpaid accounts receivables, you are able to pay your bills in a timely manner. This will improve your credit rating and make you eligible for other forms of funding. Having cash on hand also makes it possible for you to expand your business and accept new projects and clients. The opportunities are limitless if you have the necessary working capital.
Improve Credit Terms for Clients
If you use accounts receivable financing on a regular basis, you know that you will have access to funds usually tied up in unpaid invoices. This allows you to offer more generous payment terms to your customers. New clients are attracted to businesses that offer favorable credit terms.
For more advice on accounts receivable financing, look to Norus Capital.