Experts affirm that it is a normal aspect of running a small business to offer credit terms to your clients. However, while invoices remain unpaid your cash flow suffers and you are often unable to handle necessary expenses. A solution to this dilemma is accounts receivable financing, also known as invoice financing or factoring. A factoring company purchases your unpaid accounts receivable, and in return you receive an advance of 70 to 90 percent of their value and the balance, minus a fee, when your customers have paid in full. Here are some of the advantages of AR financing.

Qualify Easily

Traditional business loans have an extremely high rate of rejections of applicants. AR financing, though, is much easier to qualify for and obtain. Factoring companies are not so much concerned about the credit score of your business but instead focus on the creditworthiness of your clients. In fact, the steady cash flow you receive from AR financing can help you raise your credit score because you’ll be better able to make payments on time.

Avoid Risking Collateral

To obtain many types of funding, you are required to put up your personal or business assets as collateral. With AR financing, however, there is no collateral needed.

Receive Funding Quickly

The application and approval processes for traditional loans from banks or from the U.S. Small Business Administration take weeks or even months. In contrast, you can often have the funds you need from AR financing within 24 hours.

Don’t Add to Your Monthly Payments

Funding your company from accounts receivable financing is not the same as acquiring a loan that you have to pay back in monthly installments. Instead, the factoring company receives its fee when your customers pay their bills.

Save Time

One of the most tedious and time-consuming tasks that small businesses undertake is the collection of payments from their clients. When you strengthen your cash flow with AR financing, the factoring company takes over the burden of collections so that you can focus on running and growing your business.

For more advice on AR financing, contact Green Apple Funding.