Accounts Receivable (A/R) Factoring allows you to obtain the working capital required to run your business and provides security knowing that you will get paid sooner than your terms allow. A factor purchases your invoices in A/R and assumes responsibility for the financial ability of the customers to pay. The factor extends advances to the customers, process the payment from customers, and also manages the accounting transactions. Universal Funding will provide cash advances against most open receivables prior to collection.
Factoring Benefits and Highlights
Factoring A/R protects you against cash flow shortages, increases the effectiveness of your collections, and enhances your company’s liquidity. Large corporations have used this method to increase cash and reduce the management of receivables, but now it is becoming a popular option for businesses of all sizes. In fact, companies that benefit from factoring their A/R include those that are startups, rapidly growing, undercapitalized or seasonal. Additional benefits and highlights include:
- Flexible source of cash when you need it
- No need to wait for payment from your customers
- Funding amounts to $1 million or higher
- Quick turnaround and less underwriting than traditional financing
- Funding available in less than two weeks
AR financing can provide you with the funds necessary to pay suppliers early and receive a discount. In addition, because it is not a loan no debt is incurred. This makes it easier and faster to obtain than other types of financing.
Continuous Source of Operating Capital
Unlike conventional funding sources, factoring AR focuses on your sales, not your balance sheet. It is an alternative to asset-based lending in the sense that you are using the open invoices as an asset as opposed to equipment. As sales increase, more working capital becomes available to meet the demands of operating your business. In that way, AR factoring provides a continuous source of funds on a short-term basis.
Ultimately, your business operating cash flow requirements will dictate the level of factoring for your AR invoices. When you complete a rate form, one of our funding specialists will contact you to find the solutions to get your business the money it needs quickly.