Primary Advantages of Using Account Receivables Factoring

by | Feb 14, 2013 | Business

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Any small business enterprise that is suffering with a cash flow problem can benefzit from selling off their outstanding invoices. The main criterion for this type of financing is having an adequate customer base and clients with a good credit rating. This form of revenue acquisition is fast and convenient particularly when compared to borrowing institutions such as banks and credit unions. Account receivables factoring is a growing trend especially in light of recent economic conditions.

Quick Revenue Source
Account receivables invoice financing is an excellent way to procure funds if your business is facing a cash crunch. Many factors are able to offer an invoice payment to their clients within a business day, although the process might take more time initially. However, after a company establishes a good working relationship with the factoring service, the process moves much faster. Unless a small enterprise has an open line of bank credit it would be difficult to come up with a faster and easier way of raising commercial capital.

Very Convenient
A large benefit to account receivables factoring for any organization is the convenience factor. Trying to obtain a loan through a bank is often time-consuming and complicated. Even when a company has a decent credit rating and the necessary accounting documentation on hand there is still no guarantee they’ll be approved. By turning to a factoring company that specializes in the purchasing of outstanding invoices, small businesses are able to secure the funds they need to grow and prosper.

Working Capital
One thing that most business owners deal with on a weekly or monthly basis is having a sufficient and steady cash flow. This can be hampered when a company has numerous outstanding invoices from slow paying customers. In addition to filling new orders and meeting payroll demands, most businesses have a number of other financial obligations that must be addressed. An invoice factoring service is able to help small businesses safeguard their valuable assets by supplying fresh capital.

Additional Financial Services
Another advantage of working closely with a factoring company is that many also offer other financial solutions to help small businesses. These can include government contract financing, purchase order financing, payroll funding and supplier guarantees. With their simpler approval process and fast payment for qualified sellers, factoring services make it extremely easy to turn your customer base into cash. It is often the best way for small companies to staff and grow their businesses quickly.

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