Sometimes it seems like no matter what you do with your business, your money tends to get stuck. You know that you have customers who have made purchases, the money is there (or will be there), but there is little you can do about it in the meantime. All the while, more and more of your time gets sucked up with tracking down the actual money that you should have instead of focusing on doing your business. In cases like this, looking into accounts receivable financing can be very beneficial. Understanding what it is, how it takes focus off of collection, and how it gets your money flowing again should make the benefits clear.
What is It?
There are times in certain businesses where your services have been performed, your customers have received a bill, but the bill has not yet been paid. This leaves a bit of your business’ money in limbo. There is usually a time period given to the customer to pay the bill, but sometimes customers are late with their payments. In some cases, customers might not pay at all. When your business decides to do accounts receivable financing, you basically turn over these customer debts as collateral for a loan.
Take the Focus Off Collection
When you are spending a lot of your energy trying to contact customers and get them to pay their bills, that is energy that could possibly be spent on other proactive parts of your business. Calling late-paying or delinquent customers keeps you on money already owed instead of generating new income. When you get accounts receivable financing help, you basically turn over these accounts to your lender, who then takes on the responsibility of trying to collect the money from the customers. This allows you to put your energy into making new money.
Get Your Money Flowing Again
When your money is stuck in accounts receivable, there isn’t much you can do. If you do get financing by turning over those accounts, however, your money is suddenly moving again. You are no longer stuck and your business can keep moving forward. It doesn’t have to be a long-term solution, but can be great if you need a quick way to get your business moving again.
When your business is stuck in a rut thanks to customer bills that are not being paid, then accounts receivable financing might be a viable option. It takes the pressure of bill collection off of you and gets your business’ money flowing again. If you find that your company is spending more time trying to get customers to pay their bills than generating new business, this might be a good option for you to look into.
Read more on how Durham Commercial Capital’s Accounts Receivable Financing can benefit your business.