If you own a business which is seasonal, you are probably well acquainted with the lull in sales activity which follows the holidays. Unfortunately, that can also mean a serious lull in incoming revenues, which leaves your business short on cash reserves.
If this sounds like your company, accounts receivable financing might be just the ticket for you.
How Accounts Receivable financing works
Accounts Receivable financing is sometimes referred to as invoice financing, but either way, it involves being paid upfront money which is based on the face value of invoices you sell to an alternative lender. Accounts Receivable financing is slightly different from invoice factoring, in that a client will generally receive 100% of the face value of invoices with A/R financing, as opposed to perhaps 85% with invoice factoring.
It’s also true with Accounts Receivable financing that the company selling the invoices is usually still responsible for collecting on the invoice amounts from their customers. With invoice factoring, that is not usually true, and the factoring company becomes responsible for collecting the invoice amounts from customers.
Advantages of Accounts Receivable financing
When your cash flow is less than expected, Accounts Receivable financing can provide immediate funding, so that your business can continue normal daily operations. When you have seasonal slowdowns especially, this can be very helpful, because you won’t have to wait perhaps 30, 60, or 90 days to receive payments from customers.
The chances of approval for Accounts Receivable financing are also very good, because the invoices themselves serve as collateral in the transaction, so your business credit history is much less of a factor. You will also have the option of selling as many or as few of your invoices as you like to an alternative lender, so you can make up the difference of whatever cash shortfall you are experiencing in any given month.
Accounts receivable financing with BizCap Commercial Finance
If you own a business where accounts receivable financing might be beneficial to you, contact us at BizCap Commercial Finance to discuss some opportunities. We may be able to provide you with funding in an arrangement which works to our mutual benefit.