Maintaining positive cash flow to keep up with business expenses is a recurring issue for many companies that experience sustained growth and increased costs of business. Many of the cash flow problems may be resolved by factoring receivables (invoices due) that the company owns. Providing a quick and efficient way to avoid taking on debt while generating ready cash for business needs, factoring receivables provides a reliable alternative to debt and credit lines for many business in need of cash flow.
Rapid Cash Flow Solutions
With factoring receivables, many companies that have an established relationship with the factoring company are able to receive cash in less than 24 hours, while those that are new customers find that it takes a week or so for the factoring business to fully evaluate your invoices and assess the credit of your customers. In any case, the cash available through accounts receivable financing is available to the company with a much quicker turnaround time than conventional bank loans with its exhaustive paperwork and application protocol.
In addition, companies that benefit from sale of their receivable accounts enjoy full freedom to determine how to apply the funds, unlike many bank loans that may be spent only on specified purposes in the company. Because the money from receivables is your company’s money, not borrowed funds, it is yours to apply to the needs the company can most use it for, not just to what the bank says you may apply the money toward.
No More Debt
Many companies are able to resolve their debt situations with factoring, as they avoid taking on further loan obligations by using their invoices to raise money, and they then have available cash flow to pay down debt as it comes due and avoid further encumbering the business with debt. Further, the money available from receivables is not limited to minimum amounts, but you are able to pick and choose the accounts you prefer to sell. With invoice financing you avoid restrictions of loan and revolving line of credit contracts that have lengthy lifespans and onerous terms for your company to maintain payments.
Maintain Consistent Cash Flow
With accounts receivable financing you are arranging the sale of a company asset, namely, the money owed to your business by consumers who have purchased goods and services from you and agreed to pay in the future. Those contracts with your customers have present cash value, usually for a reasonable fee of less than five percent. A factoring company will exchange you cash for your business needs for your accounts receivable, which the factoring company then becomes responsible to collect on to obtain their money.
Many businesses have found that accounts receivable financing is ideal for businesses without extensive credit history, and those that, for whatever reason, are considered “non-bankable” and are unable to receive traditional financing. Factoring receivables relies upon your company’s accounts receivable to generate cash, and does not rely on your company’s financial reports, as it is a financing alternative that is not based on credit.
See How Gold Beacon Capital’s Account Receivable Financing Program Benefit Your Business.