Factoring Accounts Receivables For Fast Cash
As a business owner, you understand that there are times when you need cash for working capital. Factoring accounts receivables is a viable alternative when approaching a conventional lender is not an option.
Factoring is the process of selling your accounts receivables. For years large corporations have utilized this method to increase cash flow and reduce the management of receivables. Now it has become a popular option as a financial solution for B2B businesses who offer terms.
How Factoring Accounts Receivables Can Work for You
Companies use factoring to increase cash flow, often to help during a period of business growth. Instead of lending, it relies on sales. The firms who purchase accounts receivables are called factors. A factor buys invoices based on the credit of your customer, not that of your business. There are myriad factoring benefits for your business, some of which include:
- Factors advance a large percent of the receivables to you quickly
- You receive the remainder owed when the customer pays
- You outsource the accounts receivable function
- Your credit score is not affected because there is no loan
- You can pre-approve credit for your customers
Factoring accounts receivables is a simplified method to streamlining your cash flow, particularly with the tightening of credit regulations and challenges in obtaining funding from conventional lenders. It is a relatively quick process, the terms are less restrictive, and the funds are available fast.
Converting Inventory to Cash
Factoring accounts receivables is an ideal method to convert your delivered inventory or work product into cash to pay vendors and taxes, or meet payroll and other obligations. It is an alternative to lending bank loan and provides you with capital when you need it. Factoring rids your business of its aging receivables, allowing you to shorten or completely eliminate collection efforts.
The individual financial components of your business will determine your precise factoring terms. Submit a rate form now to discuss your factoring choices with one of our funding experts to find the best solution to get your business the money it needs fast.