What is Accounts Receivable?

Accounts receivable is an amount that is owed to a company by a customer who purchased goods or services on credit. Accounts receivable are considered an asset on the company’s balance sheet. Smart business owners are always looking for ways to improve their cash flow. Some have realized the effectiveness of working with invoice factoring companies. Factoring companies purchase the accounts receivable (AR) and provide business owners with necessary cash to pay for expenses such as payroll, inventory, office supplies, marketing, advertising and even taxes.

When a company decides to factor its invoices, it first looks for factoring companies that serve their industry. They review their existing invoices to determine which ones they can sell in order to cover the cash shortfall they have. This is one of the easiest and fastest ways to inject cash into a company.

Why do Companies Factor Receivables?

Factoring converts your accounts receivable into working capital without creating debt or adding liability. Factoring does not rely on your credit rating, collateral, or bringing in investors, so startups and companies who have faced previous cash flow challenges are more easily qualified for funding. This type of financing helps companies free up capital that is stuck in unpaid debts. We fund up to 95% of your accounts receivable, getting monies owed to you working for you before they are paid, with rates starting as low as 0.55%.

Benefits to factoring, instead of traditional financing such as bank loans or investors, include:

  • You are not creating a debt—instead you are able to utilize the money you would have collected from customers before they make payment.
  • You can use the factoring service for whatever need you have—use the funds to cover payroll and other payments vital to your business or use it to put your growth plan into action.
  • You can use it as many times as you need—when a need arises you can utilize the service without having to reapply and it is flexible so it scales up with the growth of your business without lengthy paperwork.
  • Your credit rating is not a determining factor—you are not repaying funds, we are simply freeing up your operating capital through invoice factoring.
  • You no longer need to chase your customers for payment—the factoring company now works with your customers for payment of their invoices.

What is a Factoring Company?

factoring company is a business that purchases another company’s unpaid invoices, otherwise know as factoring of accounts receivables. Your business will usually receive payment for those invoices within 24 hours. The factoring company takes the responsibility of collecting payment of those invoices from your customers. While you could go to a bank for financing, when you do, you incur debt. It could also be a more time intensive process and affect your company’s credit as well as your personal credit.

How to Choose an Accounts Receivable Factoring Company

Receivable factoring companies offer businesses an alternative to traditional commercial financing. Receivable factoring companies, like Universal Funding, purchase open invoices and provide a large advance, giving your business the opportunity to secure the funding you need for expansion, purchase of additional raw materials, payroll, or simply cover day-to-day operating expenses.

Why Choose Universal Funding?

Universal Funding Corporation is the right partner for you because we are there when you need us, whether you only need us once or in an ongoing capacity. We understand the need for reliable cash flow and opportunities for growth generally come with tight timelines.  And unlike many other factoring companies, we can have funds in your hands in a matter of days.

Universal Funding is a private funding source that has funded thousands of businesses and more than $2 billion since 1998. We believe your business deserves a personal evaluation to determine the right financing approach. We take the time to learn about your business to get a clear understanding of the challenges you face and the growth opportunities that will take you to the next level.

Our expertise and tailored financial solutions offer many benefits:

  • Fast funding, typically within 24-48 hours
  • Get access to your cash tied up in unpaid invoices
  • Your credit is not the key determining element
  • Selling your accounts receivables will not influence your credit negatively
  • Eliminate the typical 30-90 day wait for payments
  • High advance rates and low factoring fees

Watch this video to learn how a factoring company can help you.

Learn how Universal Funding can help you get quick access to working capital.

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