Selling accounts receivables is a great way for companies to bridge the gap between sales and cash flow, especially if you work in an industry where your customers are not expected to pay for long periods of time—30, 60, or even 90+ days after the sale is made. In the meantime if you need more cash to help keep operations running smoothly, you can sell those receivables and get working capital right away. Because of the nature of these transactions it won’t be a fit for every company, but there are certain industries that will benefit more than others.
Winning a new contract is often great news for your business, because it will be an ongoing relationship where more work can be generated from. However, the cost of upfront printing materials, especially ink, is costly and is required to produce the end product. You can still offer terms for your clients, but receive money almost immediately to use to produce the projects as they come in.
Manufacturing is one industry where selling receivables is a common practice. Since these businesses must manufacture a product before they will get paid, they require money in the meantime to cover raw materials, production, transportation, and supply costs. Factoring helps maintain positive cash flow throughout the process. Whether a company produces clothing, computer components, or furniture, cash flow is a focus during the production and distribution process.
Staffing and Recruitment Agencies
Similar to manufacturing, temp agencies or staffing and recruitment firms must have cash on hand for payroll long before they are able to bill their clients and receive payment. Employees who work with staffing agencies are often guaranteed quick turnaround on payment (as little as one to two weeks), while the invoice and payment process could take months. Universal Funding focuses their services on staffing agencies that do temporary staffing as opposed to permanent placement agencies.
For businesses in these industries looking for options to help keep cash flow positive when payment is weeks or months away, Universal Funding can provide accounts receivable financing to bridge the gap. Call us today to see if our financing solution is a good fit for your industry, or fill out or simple online rate form to get an estimate.