Before we delve into the world of numbers and figures, let’s first look into what exactly accounts receivables are? As it is evident from the word receivables, it is actually the cash payment that is outstanding towards a certain business. Many small businesses sell those outstanding invoices at a discount to the specialized accounts receivables finance company, in return for some business financing. It receives cash payment against those invoices while it is fully aware of the risk involved with those receivables.
Why Do We Need?
Looking at the current trends, it’s very usual for any successful business to face shortage in their cash flows at any point. The problem arises when you have corporate expenses to pay, whereas your clients still have one or two months to pay off their invoices. It is at such times that the businesses need some financing to curb with their cash flows and avoid touching their cash reserves.
You can give your cash flows a world of good by availing an accounts receivable financing option, which is commonly known as accounts receivables financing or you may also call it accounts receivable factoring. You can play on top of the situation involving your customers who need more time to pay you back by advancing your funds. It will help in generating funds to carry out your business activities. Without further ado let us look into other benefits that you can gain through account receivable financing:
Fast Access
Late payments towards the invoices along with the unexpected expenses of company operations can affect your business instantly that can be hard to recover. Every company always has a back-up plan to deal with such a financial crunch at any stage. Accounts receivables financing helps in converting invoices into cash flow right away. Even in small businesses, you cannot force your customers for immediate payment. There are many companies providing funds against your account receivable invoices, providing the full value of your invoices or slightly lower than the value of your invoice. It is a very fast process as compared to the cash which will be received after the set time period. Your funding company will cover the expenses like rent or payroll while they recover the invoices.
Most of the account receivables financing programs get approval easily and quickly. Generally, it gets approved in one or two weeks. This quick process is specifically very beneficial for the companies that are going through any turmoil and are in need of a quick financing solution. The financial experts in these companies generally advise the decision-makers to opt for this option to arrange for money in the shortest possible time.
Retain Ownership
This type of business financing does not require you to sell your business subsidiaries and shares of your business to acquire small finances. It directly helps in generating cash instantaneously without touching your own assets to acquire finances. In this type of financing, it is one of the best bets of financing because your ownership does not get affected in any way.
In other financing or loans out there, they require many documents, property verification, referrals from other proprietors and many other prerequisites that are required as a guarantee. On the other hand, in account’s receivables financing, you do not need to sell or share parts of your owned assets with any other person in the form of a proof.
Collateral-Free
This type of financing is totally secure and does not require any collateral with the guarantors and the papers of your property and assets. Traditionally, venture capital backers require a stake in your company’s shares in order to provide you with their funding. Accounts receivable financing does not require your equity to be at stake in your company, along with the hundred percent ownership under your name.
Stress-Free
It is a fast and simple financing solution for your working capital that provides you with the peace of mind. It allows you to focus your energy on the other key areas of your business and stops you from wasting your precious time on petty and little things regarding financing. Eventually, it will make your business grow and it will not interfere with your customer relationship. It will also put less pressure on your workers who are liable to work in receiving the receivable amount. Obviously, a stress-free mind means a conducive environment for the business to make headway.
Grab New Clients
If you want to expand the reach of your business, the best option is to use accounts receivables financing. If new clients are coming your way when you are lean on cash, you can choose the option to use finance invoices from your incoming new clients. You can easily finance those invoices upon completion of the work.
Get Paid Sooner
If you use this solution, the best thing about it is that you can monetize your accounts receivables. You can get paid immediately from the factoring company (funding that you can use to pay corporate expenses or to grow your business) instead of waiting up to 60 days to get your funding. Rather you are able to receive full amounts against the invoice that are provided to the fund’s provider. It is just like having a cake ready without waiting for its baking time.
Financing Growth Keeps Pace with Your Business
It is a great idea to have accounts receivables financing because it automatically elevates with the overall growth of your business. Furthermore, it can keep pace with the increase in receivables, but only if the invoices are qualified. If you need extra diligence, the process can take up to a day or two. Receivable financing is a win-win alternative for the companies that are growing at a brisk pace. The more your business grows the better account receivables financing companies offer the rates towards the invoice face value. When there is an increase in your cash flow, it allows you greater liberty of expanding your own business by adding potential clients as soon as any new opportunity hits.
Here we don’t have to wait for the bank’s approval towards your loan, in order to make your first purchase because you are already sufficient in your cash by the virtue of accounts receivables funding.
Reasonable Charges
Accounts receivable funding is mostly available at nominal charges, which are actually really reasonable. This type of funding is less heavy on the fees or expenses as compared to the typical merchant cash advance start-up funding or any other type/alternative. Opt into the account receivables funding with much confidence in the surcharge or fees.
Seek Professional Cash Funding Organisations
Opting for this mode of business financing lets you sit back and relax. You work in collaboration with the professional and commercial people who provide cash flow and management services. Paperwork, processing, and collections are all taken care of, serving as an extension to your company by providing you the opportunity to concentrate on the growth and daily affairs of your business.
Conclusion
Whether, you are running a small-medium enterprise (SME), large wholesale business, or a grand empire, you can’t guarantee a stable cash flow all the time. At every point, in running your business you ought to have proper cash flow in order to run it smoothly or to acquire new clients. The easiest and lucrative way to generate cash in order to run your business in a subtle fashion is the accounts receivables loans financing. Those who avail this option seldom face harsh predicaments in their businesses.
