Thursday, November 12, 2015

Benefits Of Accounts Receivable Financing

By Connor G. Schiffman

A/R financing is also referred to as invoice financing. It offers a great solution for business that may be in need of more funding that may be unavailable from traditional lenders. Most firms do require extra cash flow in order to support the seasonal demands, business opportunities, growth or solve a short-term cash requirement. Through accounts receivable financing, your business is provided with flexible and immediate cash.

The A/R financing has been gaining a steady popularity owing to the many benefits that it provides. Advantages posed through this type of funding are so attractive that you will find it hard to resist. Through this step, the financial profile as well as your credit rating of your company is highly improved. Other benefits that are accrued through accounts receivables comprise of:

Quicker cash flow. This mode of financing provides you with immediate opportunity of converting credit sales into immediate cash flow for the business. Through receiving outstanding receivables monetized by commercial funding company, you get into a position where you can obtain money whenever you are badly in need of it. This save you the time you would spend waiting for weeks and months for your client to pay you your dues.

More focus in put on the business. Acquiring an easy working capital saves your resources and consequently giving you comfort. You now get into a comfortable position where you can redirect all your energies on different business activities, like sales and marketing, capable of providing much profit. That time that one would have spent collecting payments from defaulting clients is now devoted to bolstering your business.

More user friendly. A/R financing can be applied to any kind of firm, large, medium and small. Setting up lines on accounts receivable factoring takes only a couple of days. Unlike conventional bank loans, making payments or creating a debt will not be required. In addition, one is free to finance as little or as more as he or she wishes.

Additional services offered. Majority of the financing firms offer to help in the management of your whole accounts receivables portfolio, which comprise of reporting, invoice processing and posting. Consequently, you get more time to focus on revenue-generating activities. In most cases, the factoring firm aids you in determining the credit rating of a potential client before you make actual sales to them.

What the firm actually does is to check the payment history of potential clients prior to formally signing them up. Through this, you significantly reduce prospect of bad debt as you begin getting good clients with reliable track records. Chances of financial crises like bankruptcy or inability to pay taxes are eliminated.

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