Whether you’re a long-time fan of accounts receivable financing or you’ve just learned about this option, there are many benefits for companies choosing to finance their accounts receivable. Every business faces a slow season. Sales can drop, machines can break and employees can unexpectedly quit. Learn four ways this flexible financing alternative can keep your finances in order through the ups and downs of your year.
From sudden investment opportunities to hiring new employees, growing your business takes cash. By giving you upfront payments for your accounts receivable, this form of financing can keep your working capital high enough to invest in your own company. Increased growth can help you take on more clients, create more products or expand into a new marketplace.
Credit or No Credit
One of the most significant financial hurdles for small business owners is credit. If your credit score is low or non-existent, you’ll have a hard time receiving the funding you need. Bank loans require high credit scores, lengthy applications, and firm financial records before giving you a loan.
Accounts receivable financing, on the other hand, doesn’t require a credit score at all. As long as your customer has a reliable track record of paying invoices, you’ll enjoy hassle-free cash without worrying about your credit.
Give Your Customer a Plan
Most small businesses are forced to start out as cash-only. This is usually due to financial difficulties. A small business may not have the capital necessary to delay receiving payment for a product or service. However, many potential customers are unable to pay in cash.
The best solution to this predicament is to give your customers a payment plan or lengthening their invoice deadline. If you can’t do this with your current financial situation, use financing to provide a cushion for both you and your customer.
There are hundreds of unexpected expenses, improvements to be made and other reasons that a company can benefit from having easy-to-access working capital. Whether you’re going through a financially stressful time or just need a way to pay for your monthly bills, additional cash can give you the leg up you need to thrive in a competitive industry.
From investing in your future to paying for your past bills, accounts receivable financing can give your company the funding it needs to move forward. With these benefits in mind, it’s easy to see how you could more easily execute your action plan with this flexible and competitive financing option.