Accounts Receivable Financing (Factoring)
Accounts Receivable Financing
Simply put, accounts receivable financing is the purchase of accounts receivable from a business at a discount. It is designed for businesses that need money immediately, and can not afford to wait 30, 60, or 90 days for a customer to pay. In most cases, either the business owner’s back is against the wall and can not meet his cash demands (because, for example, his customers are slow paying or income is low due to a seasonal slowdown), or the business is growing so rapidly that its cash flow can not keep up with its growth.
Some of the more common industries that rely on accounts receivable funding to maintain a steady cash flow includes:
* Personnel/Temporary Agencies
* Professional Services (Legal, Accounting)
* Trucking Companies
* Apparel
* Caterers
* Medical Groups
* Commercial Printers
* Physicians
* Manufacturers
* Hospitals
* Wholesalers
* Nursing Homes
* Importers
* Assisted Living Facilities
* Distributors
* Construction Companies
Any business that is not “cash & carry” (like a hair salon or dry cleaner) can benefit from accounts receivable funding, as long as an invoice is generated and a verifiable product or service is delivered. Accounts receivable funding:
* Offers you immediate and dependable access to unlimited working capital.
* Quickly strengthens your company’s financial statements and credit rating.
* Makes it possible for you to obtain cash discounts for early payment of your accounts payable (or any other dept). Gives you the ability to offer better credit terms to your clients.
* Increases you purchasing power, which provides cash for marketing, expansion and new equipment.
* Can enable you to meet payroll, pay tour taxes on time and eliminate the need to file bankruptcy.
