Accounts receivable financing (AR financing) is a viable option, especially for small businesses that need fast cash. Check out a few of the advantages below:
Increase Cash Flow
As a business owner, you always have a variety of needs and each of those needs require money. You have to pay your employees. You need to save up for seasons when you might not have as many sales. Sometimes you need to spend money on maintaining or upgrading your equipment or technology. Other times, an opportunity arises in the form of expanding your office space or adding a new location. You might have an exciting project coming up or innovative ways to expand your business and reach new customers. All of these things require you to have cash on hand and that’s when an option like accounts receivable financing can come in handy.
Qualify More Easily
When it comes to qualifying for traditional loans, sometimes the requirements can be too great a hurtle for businesses to jump. If your credit score is too low, you haven’t been in business for a long time, or you need a relatively small amount of money, you might not meet the rigorous standards set by your local bank. Furthermore, if you’re hesitant to risk your personal property by using it as collateral or you just don’t have what your bank is looking for to mitigate the risk of offering you a loan, you might have to consider other options. With AR financing, your lender will be looking at your customers’ credit ratings, giving you less to worry about as you seek to qualify for the funds you need.
Get Access to Fast Funds
Depending on your contracts with your customers, you can be waiting several weeks or even a few months to receive payment for your products and services. And some customers are simply tardy in fulfilling their obligations. In the meantime, you have everyday expenses that don’t stop for lapses in cash flow. You have to pay staff members, rental rates for your office space, production costs, etc. You could try applying for a traditional loan, but even if you qualify, it might take a number of weeks for you to receive the funds. Especially in the case of an unexpected event, that might be too long. Instead, consider AR financing: You could receive the money in just a couple of business days and soon be on your way to putting it to good use.
Sometimes you need to think outside the box to find a solution – in that case, AR financing might be just the answer for you.