A/R funding is at times referred as invoice financing. This kind of funding provides an ideal solution for firms in need of finances that may be not available from the traditional lenders. Majority of the companies require additional cash flows aimed at supporting seasonal demands, growth, business opportunities or solve any short-term cash requirement. Flexibility and prompt cash for your business is assured through accounts receivable financing.
It is because of the many beneficial reasons that A/R financing has been steadily gaining popularity. The advantages that are posed by this kind of funding are way too good to resist. This method improves the financial profile and credit rating of your company. The various benefits brought by accounts receivable are as follows:
Quicker cash flow. Financing your business through this mode provides an immediate opportunity of changing the credit sales into cash flow. By obtaining outstanding receivables that are monetized through commercial funding firm, you enter into a position whereby you can get money any time you need it badly. This saves time that would otherwise have been spent waiting for several weeks for a client to make his payments.
Focus on the business. Getting a hustle-free working capital relieves up your resources consequently giving you peace of mind. This enables you to turn your energies on other business activities that are more profitable like selling and marketing. The time that would be invested in collecting payments from unsympathetic clients becomes devoted to cementing your business.
More user friendly. This kind of financing is unbiased of whichever type of business, small, medium or small. Setting up the lines on receivable factoring will only take a few days. Unlike the mainstream bank loans, this funding does not require one to make payment or create a debt. To add on, a person is free to finance in accordance to his wishes.
Additional services offered. Majority of the financing firms offer to help in the management of your whole accounts receivables portfolio, which comprise of reporting, invoice processing and posting. Consequently, you get more time to focus on revenue-generating activities. In most cases, the factoring firm aids you in determining the credit rating of a potential client before you make actual sales to them.
The firm checks on the payment history of a potential client before it signs him up. By doing so, you reduce the prospect of a bad debt by a significant margin, and you start dealing with clients who have a reputable track records. Instances of getting into a financial crisis such as bankruptcy are eliminated.
Connor G. Schiffman has 27 years of experience in commercial lending including factoring, asset based lending, and banking. Connor helps readers manuver through all the account receivable options providing practical and useful knowledge to better understand all your lending options. If you want to learn more about Accounts Receivable Funding he recommends you check out www.receivablefactoring.net.