Cash flow is one of the most critical aspects of running a successful business. Without it, a company may not have the funds needed to pay its expenses, invest in growth, or even stay afloat. Accounts receivable funding, also known as invoice factoring, can be a quick and efficient solution to cash flow problems.
Accounts receivable funding is a financial transaction where a company sells its unpaid invoices to a factoring company. The factoring company advances a percentage of the invoice value to the company immediately, usually between 85% and 90%, and takes on the responsibility of collecting payment from the customer. Once the customer pays the invoice, the factor deducts its fee and remits the remaining balance to the company.
One of the most significant benefits of accounts receivable funding is the speed at which it can provide cash flow. Unlike traditional bank loans, which can take several weeks or even months to approve and disburse funds, invoice factoring is often completed within a few days. This can be especially important for companies that need to pay payroll or take advantage of time-sensitive opportunities.
Another advantage of accounts receivable funding is that it is based on the creditworthiness of the company’s customers rather than the company itself. This can be particularly beneficial for businesses that are new, have a limited credit history, or have struggled to obtain financing in the past. As long as the customer has a good credit rating, the factor will typically be willing to advance funds based on the invoice.
Accounts receivable funding can also help businesses reduce the risk of non-payment by relying on the expertise of the factoring company to investigate the credit strength of your customers. The factoring company will also assist your collection efforts.
American Receivable has a 44 year track record of helping their clients stay cash flow positive! Our flexible factoring program keeps our clients in control of how much and when they factor invoices. By using our streamlined application, you can be funded in only 2-3 days. Call us today to get start on the road of being cash flow positive.
Jack Stieber jack@americanreceivable.com 972-404-4726
Brad Gurney brad@americanreceivable.com 800-297-6652
Dakota Stieber dakota@americanreceivable.com 512-339-5112
