Financing Your Business with Accounts Receivable Factoring
Have you exhausted your bank financing options? Does your company need working capital? Read this article to find out if accounts receivable factoring can give you the working capital you need.
However, if you own a business that is selling services or products to good commercial clients, you have an alternative option. And you won’t find it at a bank.The option is called accounts receivable factoring and it enables you to capitalize on your biggest asset, your invoices from great clients.
Factoring provides you with the working capital you need to grow your business and can help you if your biggest challenge is that your customers pay in 30 to 60 days. Factoring provides you with an advance payment, giving you the necessary funds to meet ongoing expenses such as payroll or rent. It eliminates the 60 day wait and gets you paid in as little as 2 days.As opposed to business loans or lines of credit, accounts receivable factoring is easy to obtain.
The biggest requirement is that you do business with clients that are creditworthy and pay reliably. It can work with startups or established companies. Furthermore, accounts receivable financing lines have limits that are tied to your sales. This means that as your sales increase, so does your financing. Receivables factoring is also fairly easy to use.
It works as follows:1. You deliver goods / services and invoice for them2. The factoring company buys your invoice and advances you up to 90% (1st installment) of the invoice3. Once the invoice is paid, the factoring company rebates the remain funds less a small fee (the 2nd installment)
Receivable financing fees vary based on a number of parameters but can range from 1.5% to 3%, making it a very affordable business financing tool. To qualify for accounts receivable factoring, your company must sell goods / services to commercial or government customers and have profit margins of at least 10%.
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Invoice Factoring Group is a leading factoring company. For a quote, please call (866) 730 1922.