Accounts receivable financing is gaining favor with the small business community. Is it time for your company to take advantage of the trend?
Here’s how it works. Businesses sell outstanding invoices at a discount to a specialized finance company. The business receives a cash payment, while the specialized finance company assumes the risk on the receivables. Accounts receivable financing can help you meet immediate financial needs in addition to boosting your company’s financial profile and credit rating.
Pros to Using Accounts Receivable Financing
- Fast Access
Late payments and unexpected expenses can set your business back so suddenly that it can be hard to recover. Accounts receivable financing allows you to convert invoices or credit sales into cash right away without having to hound your clients for immediate payment.Set up an account with Fundbox to ease your financial stress. Fundbox advances the full value of your invoice and doesn’t interfere with customer relationships. Fundbox funds will cover expenses like payroll and rent while you wait on invoices.
You can use the funds to buy more inventory, hire a new salesperson, or market your company to new customers.
2.Keep Your Equity
Venture capital can provide substantial sums to bolster your business, but it comes at a steep price. Venture backers require a substantial stake in your company in return for their investment. It may sound like a good deal now, but it’s an agreement that could hamper your business’ growth in the future.
If you have reliable access to cash, you don’t need to bring investors on board. Accounts receivable financing does not require equity in your company, so ownership remains 100 percent in your hands.
- Small business-friendly
To obtain a loan, traditional lenders require collateral, a solid credit score, and a capital need of more than $100,000. A bank can take weeks, even months, to verify if your company is creditworthy.Accounts receivable funding is a type of unsecured financing that doesn’t require collateral from personal or business assets. Approval only takes a few days, if not hours, and you can request as much or as little financing as you need. Fundbox’s online application takes only minutes complete. Once approved, you can advance invoices and have cash available in your bank account the next day.
- Less Stress
Fast and simple access to working capital will give you the peace of mind you need to focus on more important things—like growing your business. It will also generate less pressure on your staffers tasked with collecting on late payments and offer your clients some flexibility with repayment options. Less stress means better business.