Starting your own business is exciting, especially when you secure regular customers and know they have a plan to consistently place orders. However, this also comes with its share of challenges. In order to attract new clients in the first place it is hard to expect everyone to pay upfront and you are often required to send them an invoice for goods or services on credit terms. In the meantime, you have employees to pay and equipment to purchase for your new business.
Without the opportunity to build a reserve of working capital, your options may appear limited. That is because banks and credit card issuers are usually reluctant to approve a loan or line of credit for a business without an established credit history. Fortunately, companies like Eagle Business Credit provide invoice factoring services to offer an alternative way to get the startup financing you need while waiting to receive payment from your customers.
Understanding How Accounts Receivable Financing Works
With invoice factoring, you sell the face value of an unpaid invoice to Eagle Business Credit in exchange for immediate access to working capital. Since we look into your customer’s credit and not yours, this is an ideal option for new entrepreneurs without an established credit history. This is one reason why it’s important to select your most reliable and creditworthy customers for invoice factoring. Additional benefits of this process are that you receive your money within a few days and we will then handle all customer payment collection for you so you can focus on attracting new business and growing your company.
Selling an Unpaid Invoice is Not a Loan
When you receive startup financing by selling one or more unpaid invoices, you do not take on any debt. Instead, you are pledging the value of each invoice as collateral. This helps you to avoid the risk of debt that gets so many young business owners in over their heads. The other way it differs from a bank loan is that there are no stringent requirements to meet. You do not have to worry about submitting a profit and loss statement, tax returns, and other financial documentation often required by banks. Instead, you submit the unpaid invoices and fill out a short application that typically takes only a few minutes to complete.