Every Benefit of Accounts Receivable Financing
There are many different types of financing available to business owners to help expand your company or to keep it afloat during a slow period. One of these types is accounts receivable financing, which is not a loan. This can help you open a second location, get through a slow season or give yourself an advantage in your market by giving you the money you are owed before the due date on the invoice. With receivables financing, you are entering a contract term with the third-party to collect on the invoices while providing you a high percentage of the value.
Opening a Second Location
Expanding your business to a second location is a huge step, and one that can make or break your company. Not only do you have to secure the real estate, but you must stock and staff the new venue with everything needed to get started. By selling your outstanding invoices to a third-party to collect on, you can get the capital needed to open the new store without taking out a loan or infringing on your business credit.
Getting Through a Slow Season
Accounts receivable financing acts as a line of credit without impacting your credit score. This means that you can pull money from your outstanding invoices to help pay the bills while business is slow and keep your inventory and employees where you want them. Even when your regular business is lagging, you will have invoices with the financing company to take an advance on and receive between seventy and ninety percent of the invoice when you need it instead of when the client can pay their bill.
Giving Yourself an Advantage
Although you are technically paying someone to collect on your outstanding accounts receivable, you are also getting access to the value of those invoices weeks before you would normally be able to. This can not only help you get a financial advantage during slow seasons or right before a large project, it can also help get back to work instead of collecting on invoices and worrying about late payments.
Accounts receivable financing can help you get the money you are owed for your hard work, before the invoice term is over. This can help you buy inventory for your next big project, pay your bills and much more. You can also use this financing option to stay out of invoice collecting and get you back to the other parts of your job.