Small businesses and startups often need to deal with a lot of debtors. As a small business owner, you probably have multiple resource concerns, and to gain more customers, especially the repeat clients, you have to sell products, goods, and services on credit. Quite expectedly, many small and medium scale businesses have a considerable amount of debts, also known as account receivables. It is possible to pledge these receivable accounts for a short term loan through accounts receivable financing. You can induce quick cash flow into the business by getting a small loan from one of the factoring companies. Here are the benefits at a glance.
- Accounts receivable financing is a viable funding platform for small businesses. It allows you to get a loan, without pledging your business assets, which is a big advantage for growing firms that have limited assets and resources.
- Most businesses need considerable amount of cash for regular operations, and with accounts receivable financing, you can convert most of your credit sales into real cash. You just need a commercial financing company, also known a factoring company that you can rely on.
- With such kind of financing, your business will have enough cash to pay the creditors, which adds to the value of your brand. In short, you will never fail in making payments on time. In the long run, if you don’t have the choice of asset-based lending, this is probably the only choice for quick short term loans.
- The need for working capital is inevitable, and for an entrepreneur, nothing is more assuring than the assurance of having money for regular business. With accounts receivable financing, you will never lose control on your business, because the assets are safe, and this kind of financing doesn’t really bother the balance sheet, as long as the loan is repaid.
- Lastly, this is an effective choice for most businesses, regardless of the size or industry. Don’t need a big loan? Just pledge only a part of your receivables to get the money you want. You will also get considerable help from the factoring companies, who can manage your account receivable portfolio as required.
You will also have a personal manager appointed by the factoring company for further contact and discussing. In short, accounts receivable financing allows you to have money when you need the most,. However, do consider the charges and fee involved, which can be higher with certain lenders.