Finding a way to increase working capital is a part of every business plan. However, accessing funds without assets to leverage or a long credit history sometimes is difficult for newer businesses working to grow. Traditional bank terms are not always the right option for a company, especially if working capital is needed quickly. For those companies, exploring accounts receivable factoring rates instead of bank loan rates may be a better start to accessing cash.
Accounts Receivable Financing Basics
Bank loans are a conventional solution to increase working capital for businesses. However, they are sometimes not the best options for companies who need funds quickly or do not have a credit history preferred by lenders. The application and approval process for banks can take weeks or even months, and approval is not likely for businesses without a solid credit history or assets to leverage.
Accounts receivable financing is a solution for businesses that need funds quickly without the having to rely on a preferred credit history or assets. These businesses can sell their open invoices for a quick influx of cash. The application and approval process only takes days, and no assets are necessary to qualify for funding.
Invoice Factoring Rates
Factoring rates are not based on a company’s credit history. Instead, invoice factoring companies mainly consider the standing of the customers associated with the invoices for sale. In fact, a number of variables outside of the company’s credit history determine accounts receivable factoring rates:
- Customer credit strength and payment history
- Duration of customer contract
- Overall customer risk
- Monthly factoring volume
- Overhead costs to manage the account
No assets or credit standing information is an absolute necessity from the business applying for funding.
Learn More About Accounts Receivable Factoring
Universal Funding works with businesses that need funds quickly but do not have the assets or credit history preferred by traditional lending institutions. If your business needs an influx of cash, you can call 1-800-405-6035 to talk about factoring rates or submit a rate form to get started on an application today.