Account Receivables Funding: A Viable Source of Funding For Many Businesses

Accounts receivables funding is a viable source of funding for many businesses. Unfortunately, not enough people know about it. When it comes to commercial financing, most people only consider bank loans. However, there are other options available, some much better and easier to secure then bank financing. Accounts receivables funding is one of these alternatives. It is an extremely fast way to raise capital. Businesses are often able to secure a substantial amount of money in as little as 7 days, sometimes much quicker then that. It is not unheard of for companies to receive hundreds of thousands and even millions of dollars in as little as 24 hours.

Accounts receivables funding is actually pretty simple. A company with outstanding invoices will sell them to a Factor who will purchase them for a little less then they are worth. Typically, the going rate is between 70% and 90%. A company that has customers with high credit scores is able to secure higher rates. After the Factor purchases the invoices, the business’ customers will pay the factor the money they owe on their outstanding invoices. Once they collect the invoices, they then return these monies to the company they originally purchased them from. They will however, subtract all fees owed to them and the amount of money they already paid for the invoices. There are several advantages to this. They include the ability to generate cash fast, to avoid taking on new debt and to leverage the credit worthiness of ones customer to create capital.

Fast Cash: Small business funding allows companies to generate capital extremely fast. It is possible to secure a substantial amount of money in only 24 hours. This is much less time then a traditional lending process would require.

Avoidance of Debt: There is no need to get bogged down with risky debt when a business can utilize receivables funding instead. These days it is much more difficult to get a loan anyway. Many companies that have applied to receive a loan have been turned down.

Bad Credit? No Problem!: Companies are able to leverage the credit worthiness of their customers to receive money. Many businesses with bad credit are not able to qualify for a loan. These companies have always been forced to come up with alternative options. With accounts receivables financing, it doesn’t matter what a business’ credit score is as long as their customers are credit worthy.

Account receivables funding is a viable source of funding for many businesses. It allows them to generate capital extremely fast, avoid debt and receive monies even if they have bad credit or are a new business.