All About Accounts Receivable Financing

If your company is struggling with cash flow problems, or if you are looking to expand your operations without having enough liquidity to comfortably do so, account receivable financing (“A/ R” financing) may be the perfect solution you need. It is one of the oldest and most popular methods of bridging the time gap between when a customer places an order, and when that customer actually pays you for that order. Depending on the terms you offer your customers, this time gap can be upwards of several months. Rather than having to wait for payment, a third party A/R financing company can provide extremely fast capital to cover the time gap until the customer pays you.

This immediate access to capital when you need it most can really make a difference to your day-to-day operations, as well as being able to plan long-term more confidently. When you partner with a third party account receivable financing company, you have more buying power because you are not left waiting indefinitely for your customers to get around to paying you. With improved and immediate cash flow, you can also afford to keep on top of your existing debts owed to your vendors or other businesses. This can help your company secure more favorable purchasing or payment terms, as well as help improve your credit rating.

Speaking of credit rating, account receivable financing can really help companies who have been struggling to establish or improve their credit. Because A/R companies are primarily concerned with whether your customer can pay their outstanding invoices, they usually tend to favor financing customers with excellent credit histories. Therefore, even if your company isn’t quite as excellent credit-wise as theirs, you get to indirectly benefit from your customers in this way. With A/R financing, choosing great customers who have a history of paying timely means your company can fund increasingly larger and more expensive orders without worrying about whether you can afford to cover the cost until payment is made.

Whether you handle it yourself or you have a dedicated team, it can be tedious and time-consuming to keep on top of all of your outstanding A/R accounts. When you have to spend time following up with delinquent accounts or chasing down lost or missing invoices, you cannot focus on what is more important—the overall operation of your business. In response, some account receivable financing companies can assist you with your entire A/R portfolio, including processing invoices, posting, and reporting. This frees up valuable time, and can even help save you from having to pay additional salaries and benefits packages.

 Read more on how Durham can provide your business with Accounts Receivable Financing.

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