Cash flow problems are a reality for small business owners, especially when the business is new. When you provide generous invoice repayment terms to customers to make sales, you don’t always have the cash you need to pursue business growth or even keep up with your own company’s expenses. Accounts receivable financing can be an attractive option in this situation because it provides you with the cash you need quickly without the need for you to incur additional debt.
How It Works
With accounts receivable financing, you sell outstanding invoices to a finance company in exchange for upfront cash. The company providing the factoring services holds out a portion of the invoice value to cover its fees. Once you sell an invoice, the buyer becomes the new owner of it. This means your customer will pay the invoice in 30 days, 60 days, or whatever terms you set. It’s important to select unpaid invoices from your best customers to decrease the likelihood of a collection issue later.
Fast Access to Cash with No Collateral Requirements
Qualifying for a bank loan can take a long time even when your company has a solid credit rating. However, it can take several years to develop any type of consistent payment history at all. Accounts receivable financing just makes sense when you know a bank will decline your application or you need the money promptly. It typically takes just days for a finance company to complete a factoring application.
Another benefit of this option is that you don’t have to pledge any of your business equipment or personal assets as collateral. All you need to do is submit an application along with the unpaid invoices you would like to use to secure the cash advance. The decision of the finance company rests with the creditworthiness of your customer and not your own company.
We invite you to contact Norus Capital today if you’re ready to move forward with accounts receivable financing.