If you own a startup or a small business, then you know that having cash available to order supplies, pay vendors, and fulfill orders is a necessity. Also, depending on whether your customers pay you on a 30 day timetable or longer, your company may find itself strapped for funding when looking at projects to grow the business. In situations like these, Accounts Receivable Factoring (or AR Factoring) can turn those outstanding invoices into working capital so you focus on what your business needs to be successful.
Using Your Accounts Receivable For Asset Based Financing
Many small businesses spend an inordinate amount of time chasing after money owed from customers. This can waste internal resources that could otherwise be deployed developing sales or supporting the operations team. By factoring receivables, you are selling off those outstanding invoices in exchange for immediate cash. Eagle Business Credit takes the amount owed by your customers, and gives you money (typically the amount owed, minus a percentage) within 24 hours, so that you have cash available. What this means is that you have funds at your disposal, and the headache of tracking down the money owed on those invoices becomes Eagle’s job.
When Should AR Factoring Be Used To Help Finance Your Business?
Whereas in previous years, factoring was used as a stopgap measure when a business was experiencing a financial crisis (such as during the economic downturn in 2008), more small businesses are taking advantage of factoring accounts receivable in order to grow their businesses. Some use still use factoring to solve a short term cashflow issue, others take a longer term view to help get their companies to a size where they can then approach a bank for a traditional line of credit.
Some businesses employ AR factoring in order to finish a project that is on a tight schedule or help fund an unusually large order from a customer, and conventional lending options are not available or cannot get the funding approved in the time schedule required.
Many small businesses find themselves with large orders from clients, but the business itself is short on the funds needed to place orders with suppliers in order to fulfill their clients’ requests. In that case, factoring receivable will get you the cash you need, or the factoring company will issue an assurance letter to the supplier and pass the funds directly on to them as the invoices are factored. This takes a lot of the stress off of the business owner, and a lot of strain off of the daily operations needed to get things done.
If you are looking to expand your small business, or if you have a project that needs immediate funding and are trying to adhere to a schedule, then you might want to look into AR factoring with Eagle Business Credit, and how it can help your company.