Accounts receivable financing is an excellent alternative to a business loan if your company is experiencing low cash flow. Financing your receivables is a faster and less complicated process than waiting for bank approval, and that is especially important when your company urgently needs an influx of cash. You may be able to postpone special projects, expansion plans or even compensation to certain vendors until your invoice payments arrive. However, disrupting payroll can be extremely difficult for your employees and cause major problems for your business. Receivables financing can get cash for your business within days and help you make payroll.
Financing Your Receivables
Selling your invoices to a finance company is a simple process. Your business receives cash for your open invoices before your customer payments are due, and your customer pays the full invoice amounts to the finance company within the terms you agreed upon. So if you have Net30 arrangements, you can get funded the next day and we will wait out the terms for you. The process has several advantages over a bank loan:
- New businesses with little or no credit history can qualify for invoice factoring.
- Factoring is not a loan, so your company does not acquire debt. You are selling assets—your invoices—to a finance company.
- The application and approval turnaround is weeks or months faster than a bank loan. You can collect your cash in just a few days.
Factoring to Supplement Payroll
Since financing your receivables is such a fast process, you can use the funds to ensure that there is adequate cash for your next payroll. Failure to meet payroll is a major disruption in your employees’ lives, and this will have a negative impact on your business. Low employee morale can affect productivity or cause you to lose valuable team members.
Traditional bank loans are unlikely to supply you with funds in time to meet your next payroll. However, factoring your invoices gets you access to cash in time to cover your employees’ paychecks.
Learn More About Financing Your Receivables
Do not allow your cash flow issues to affect your employees. Universal Funding can answer help you cover payroll by financing your receivables. Fill out our online rate form to request a no-cost consultation today.