For a small business owner, there’s not much worse than facing payroll with no money in the bank. Your employees are counting on you, and you can’t let them down. You also can’t be late on another payment to your vendors and lenders. Maybe you’re making plenty of sales, but you’re waiting on the payments to come in from your customers. Selling a product on credit terms, with payment due in 30, 60, or 90 days, is a standard in business and a must for many industries. But when payments come in even five or ten days late, it can throw your company into a financial whirlwind, no matter how careful you’ve been. Accounts receivable financing can help you avoid that.
An accounts receivable financing company, also knows as a factor, purchases your accounts receivables from you at a discounted rate, and handles the collection process for you. They pay you, and then your customers pay them. It’s comparable to a loan against your receivables, but since it’s a sale of an asset and not a loan, there’s no interest to pay, and no repayment from you at all. You can work with a factoring company to put your receivables on a schedule to ensure that your cash flow is steady and predictable. That will give you the freedom you need to run your business properly. On top of that, outsourcing your receivables department will save you time, money, and stress, allowing you to get on with the business of making money.
Even if your business is losing money or in bankruptcy, accounts receivable financing can help. These companies are relying on the credit of your customers, not the credit of your business, so it’s available to companies that are in trouble when a loan might not be. Searching for liquidity while the business on the rocks is miserable, time consuming, and may be futile. Instead of seeking out a bank that will increase its rates due to your poor financial standing, look for a company that will help you dig out of the hole, all while making your life easier by taking on the collections duties themselves. They’ll provide you with detailed monthly statements, assessment of credit risks of future customers, and perhaps even offer you free credit insurance, all in addition to providing the cash infusion you need on a regular basis.
Don’t keep running in circles trying to get paid on time. Let an accounts receivable financing company provide you with timely payments to keep your business going.