Account receivable financing refers to the process whereby companies sell their invoices to a third party factoring company in exchange for a large advance. These transactions offer businesses the opportunity to secure fast cash that can be used for any reason, quickly and without complicated qualifications like those required by traditional commercial loans. Account receivable financing is a simple sales transaction that allows companies to get extra capital they need to fund an expensive equipment purchase, the purchase of additional raw materials to cover a large order, or to simply cover payroll and other day to day operating expenses when cash is running short. Account receivable financing is also a great way to manage cash flow without having to jeopardize customer relationships. Account receivable financing can be a great alternative to traditional financing for many businesses who need money faster than a bank can provide.
Account receivables financing is a fast lending alternative when you need to increase your cash flow. It provides you the opportunity to have money in the bank to cover payroll, invest in upgraded technology, pay off vendors, and prepare to take on large projects without incurring debt. Through a process known as invoice factoring, Universal Funding will advance you a large percentage of the value of invoices in your A/R.
Not every business is run the same way with the same goals or motivations, so it follows that not every business benefits equally from all financing options. The balance of pros and cons for factoring your invoices is different for every circumstance, but there are certainly a lot of companies who find the benefits of invoice factoring to be vital in their continued growth and success.
Small and upstart businesses often have trouble obtaining capital through traditional bank loans, especially in the current economic climate. Larger companies with lower credit ratings may be labeled high risk and quickly dismissed. This is where account receivables financing can come into play; providing a lending solution without inflated fees.
When More Banks Are Saying NO or Lowering Limits – We Can Say YES
We recognize that many companies would actually be very successful if they had access to consistent cash flows. Invoice factoring is very beneficial for businesses that must wait 30, 60, or 90 days for their customers to pay. These delayed cash flows may be interrupting daily operations like the purchase of materials, paying employees, paying rent or any number of other expenses which limit production or even bring business to a grinding halt
Simply put, banks won’t lend money to a company that has bills piling up and zero inventory. Factoring is different because instead of evaluating your company’s ability to repay a loan, a factor focuses on the debt already owed to you. Once the invoices have been validated, cash is typically available in 1-2 days and business can go on as usual
If your business shows signs of struggle because operating capital is tied up in accounts receivable then factoring with Universal Funding may be a viable option for maintaining predictable cash flows.
Let us quote you a rate,and then we’d be happy to discuss how our account receivables financing option can you.