Improve Access to Capital With Accounts Receivable Financing

Plenty of financial problems are outside of your immediate control as a business owner. However, there are some areas that offer more solutions than you may realize. When a client of yours has taken a considerable amount of time for pay for goods or services your company has provided, it can cause financial setbacks. The longer the payment is delayed, the slower your cash flow will be. One option that business owners are not largely aware of is accounts receivable financing. This service can be a huge help when you’re dealing with unpaid invoices.

How AR Financing Works

AR financing, also known as factoring in some circumstances, is an easy alternative financing service to understand. A company that provides AR financing services will assess the invoices in your possession. Qualifying invoices will be purchased and you will be given a percentage of the total value of the invoices right away. In most cases, the lender will then collect the debt from your client and provide you with the difference once it has been received. You are charged a fee for the service and can go on with your life without constantly waiting for a payment to arrive.

The Advantages of AR Financing

You can expect a few immediate benefits from using accounts receivable financing the next time you’re struggling to find capital and have unfulfilled invoices in your possession. For one, you will receive the cash you need to take care of important expenses like paying your vendors and employees. Beyond this, the flexibility of the service makes it ideal for those moments when you need money fast and have invoices lingering around. Plus, this financing is considered an advance. This means you won’t need to worry about paying anything back or going into debt.

Weighing Out Your Options

In order to determine if factoring is a good fit for your business, you should weigh out the pros and cons of the service. While there are many advantages, there are a couple of drawbacks to think over. The fees associated with factoring can sometimes prove hefty. What’s more, not all invoices will qualify. Before you assume that this service is the solution you’ve been after, reach out to a lender and get the details on what invoices are most likely to be purchased. This will help you know if you should pursue the option further.

The benefits of accounts receivable financing are many. The next time you need cash fast and have unfulfilled invoices lingering on your desk, consider reaching out to a lender and exploring what factoring can offer.


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