7 Reasons Why Your Business Needs Accounts Receivable Financing (Today!)

Posted at April 19, 2020 » By : » Categories : Accounts Receivable Financing and Factoring,Business Funding »
Accounts Receivable

As a small business owner, you realize that sometimes your visions are much bigger than your wallet. But that’s not a sign that your vision is too large. It’s simply a sign that it’s time to partner with an accounts receivable financing company.

The reality is, sometimes you can’t grow your business using your own resources. Or, maybe you’re in a situation where making payroll is tough to do on your own right now.

Either way accounts receivable financing, or AR financing, may be the solution to your quandary.

Here are seven reasons why your business needs AR financing.

Let’s jump in!

1. Quick Funding by Using Accounts Receivable Financing

One of the biggest reasons to take advantage of AR financing is that you can generally expect your cash quickly.

If you apply for loans for your business through traditional lenders, the process can be rigorous and long. After, you’ll have to provide large amounts of paperwork. In addition, it may take you weeks or even months to receive a decision.

When you finally receive your funding, the opportunity that you needed it for may have already passed.

However, when you choose AR financing, you can receive your decision rather quickly. That’s because the lenders that offer this type of financing simply need to check your company’s unpaid invoices and the credit scores of your customers.

This type of financing puts you in the best position to take full advantage of the business opportunities facing you.

2. No Credit Challenges

Another reason to use AR financing? This type of financing isn’t based on your own credit score. Instead, as we mentioned above, it is based on your customers’.

When you decide to sell to a lender your business’s accounts receivable, the lender will focus on scrutinizing your customers rather than you.

In light of the above, AR financing is an excellent solution if you prefer to keep your credit score out of the spotlight during the lending decision.

3. No Collateral Challenges

AR financing also offers the benefit of requiring no upfront collateral.

Banks usually want collateral before they lend you money. However, if you have leveraged your assets, like your building, for collateral in the past, you may have no more collateral to offer.

Fortunately, with AR financing, your yet-to-be-paid invoices serve as your collateral.

The AR financing lender you choose will evaluate your invoices to see how much risk is involved with them. Then, if they like what they see, they’ll purchase the invoices from you.

4. Financial Stability

Yet another reason to go with AR financing is that it may give you time to balance your income and expenses. As a result, it can help you to feel more financially stable.

The truth is, having cash available is critical for operating your company. You need cash to cover your utilities, rent, suppliers, and employees’ payroll.

With AR financing, you can speed up the flow of cash coming into your bank account, rather than waiting for your invoices to be paid. And this can help you to enjoy the peace that comes with being able to pay your employees and bills on time.

5. No Debt Challenges Due to Accounts Receivable Financing

AR financing is also attractive in that it is a popular alternative to going into a greater amount of debt.

When you decide to sell your invoices to a lender, you won’t actually accrue more debt. On the contrary, with a bank, you may end up taking on a short-term loan with a high rate of interest.

AR financing is especially beneficial if you already have too high of a ratio of debt to income. When used correctly, this type of financing can help you to meet your financial goals without sending you further into the red.

6. Taking Advantage of Business Opportunities

As we mentioned earlier, what’s great about AR financing is that you don’t have to pass up a wide variety of business opportunities that may present themselves in the near future.

What types of opportunities? For starters, AR financing may enable you to complete new marketing and sales initiatives that you otherwise couldn’t afford to begin.

You can also use AR financing to capitalize on expansion opportunities. In addition, this form of financing can come in handy for securing brand-new business accounts or buying extra inventory.

In other words, AR financing can help you to elevate your business and boost your bottom line like never before in the coming months.

7. Decreasing Expenses

Finally, a major advantage of using AR financing is that it can help you to reduce your operating expenses.

You can use your funding to pay your suppliers in cash. This may make you eligible for attractive cash discounts.

In the end, AR financing can help you to save money, which, in turn, can be used to make more money.

How We Can Help with Accounts Receivable Financing

If you’re looking for accounts receivable financing, we’ve got you covered.

With Your FundingTree, you can easily fill out a free online application for business funding. And this simple application process won’t impact your credit score.

Next, based on your application, we will share with you the best lending options available through our network of lenders. Multiple lenders from around the United States may compete for your financing business. As a result, you can rest assured that you will receive the best loan terms available.

Then, once you’re approved for accounts receivable financing, your funding will soon be on the way.

Get in touch with us to learn more about how we can help you to take your business to another level financially in the months ahead.