Accounts Receivable Financing Could Be the Key to Your Success

by : Kris Koonar

Do you feel constrained in your business by a sudden cash crunch? Are you weighed down in your small commercial venture with the odds heavily against you? Are the doors of regular financing such as loans and credits closed on you? If your answers to these questions are in the affirmative, then it is time you went for accounts receivable financing. Let these problems not hold you back from succeeding in your business any more.

Basically accounts receivable financing implies selling outstanding invoices or receivables at a reduced rate to a factoring or finance company, which in turn accepts the financial risk on the receivables and offers ready cash for your business. It can become the key to your success in the following ways:

Accounts receivable financing provides your business with a steady and dependable source of flexible working capital. Its various advantages ensure the stability and growth of the business funded by a factoring or finance company.

Factoring invoices helps to get funds faster, which can be used as the capital to cover the operational cost of the company on a daily basis. You might as well be able to minimize overhead by paying some of your own invoices earlier and avail of any discount offered.

Accounts receivable financing gives your company the added advantage of an increased credit rating by supplying surplus funds for not only making payments on time, and sometimes ahead of schedule.

Now that your business has the comfortable capital on hand to operate, it is superfluous to seek outside funding like venture capital. The negative aspect of such funding options is that they usually necessitate the surrendering of equity in the company, which instead now can remain with you. You are also free to reduce the amount of early payment discounts, which they have been offering you so far. This saves their money allowing them at the same time to receive funds, which are necessary to operate. Increased cooperating capital facilitates volume discounts on purchases leading to additional savings.

Accounts receivable financing enables you to free your business resources, with the result that you can now focus on productive activities like selling and further expanding your business. Instead of endlessly waiting for payment from your slow paying customers, you can now afford to devote a considerable amount of time towards building your business.

By obtaining accounts receivable financing in the shortest possible time, after a simple approval process, you are no longer under any obligation to make payments and create a debt like a traditional bank loan.

Say goodbye to long billing cycles as well as the difficult job of collecting money.

With accounts receivable financing, you are at liberty to choose the amount of funding, whether more or less. It is your choice.

Accounts receivable financing is a useful measure to increase your retirement income and protect your vulnerable asset.

In spite of the above attractive features of accounts receivable financing, you cannot take its success for granted. It is an important key to make this program work best to your advantage. It is advisable to consult with a well-informed and experienced attorney, who would carefully read through the lender's documents and ensure that your business interests are protected.