An Alternative to Venture Capital Financing

Mar 26
08:51

2009

Marco Terry

Marco Terry

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Learn about an alternative option to conventional venture capital financing. Read more to find out about this tool to fund your existing company

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Funding a business in the current environment has been a challenge for company owners. The business financing environment has not been friendly business owners,An Alternative to Venture Capital Financing Articles in part because many funding companies had problems of their own. Because of this, they have tightened their commitment requirements.

Some companies have tried a different approach and opted to look for business loans. Unfortunately, trying to get a business loans in the current environment is also very difficult. Most institutions are being very cautious and only lending money to companies that meet very strict criteria. For example, you may need to show that they have been profitable for a number of years, have seasoned managers, include audited financial statements and have other assets. This puts business loans out of the reach of most businesses, at least at this time. So, is there an alternative? In fact, there is.

If your company has commercial or government clients, you may want to consider a/r factoring. Most companies with commercial or government clients share the common problem of having to wait up to 60 days to get their invoices paid. Waiting this long will certainly impact your cash flow, especially if your company does not have substantial cash reserves. Factoring your invoices provides you with a solution to this problem. It provides capital to cover your business expenses without having to wait for your customers to pay you. It also enables you to take on new clients, as you no longer have to worry about net 30 or net 60 day payments.

There are several advantages to using a/r factoring. The most important one is that it is easy to obtain, since the most important qualification criteria is that you have solid customers. Aside from that, it offers a dynamic form of financing. Dynamic financing lines adapt to your sales volume, and increase as your sales increase. This makes receivable factoring a great solution for growing companies that need different levels of financing as their business grows.

Accounts receivable financing can be a great alternative way to finance your company, especially in a tough credit environment.