Accounts-receivable financing occurs when you send your company's invoices to a third party who will pay you a percentage of the invoice immediately and then bill your customer for you. When the customer pays the bill, the third party will then give you the rest of the money. This type of financing can have multiple benefits that you might want to consider.
Get Cash Up Front with Little Debt
If you've tried to get traditional types of financing and have been put off by a high interest fee or don't like the idea of going heavily into debt, accounts-receivable financing is a viable alternative. When a customer pays you on a monthly plan, it will take quite some time to get most of the money for the item or contract you sold. When you network with an accounts-receivable financing company, you'll be able to get a good chunk of that money right up front instead of having to wait for it month to month. This can give you the cash infusion you need to stay in business and continue growing, all without taking on traditional debt.
Protection from Late Payments
Because your customer is billed by the financing company, you won't be hurt immediately by one or two late payments. You'll be getting a good chunk of the money from the transaction right away and if the customer is late with payments at some point during the plan, they will be contacted by the third party that billed them. Now, if the customer ends up going multiple months without paying, then you might have to end their contract and give the money back. But in most cases, this won't happen, and you won't have to deal with it at all when it's just one or two missed payments.
Great for Small Businesses
If you are just starting out, you might not even be able to get a traditional bank loan. Normally, a traditional lender is going to want to see the assets you have on hand before they will give out a business loan. If you have customers but haven't yet built up a significant amount of cash, you might be denied. But take that same verifiable list of customers to an accounts-receivable firm and you might be in business.
Accounts-receivable financing is a great way for small businesses to get a quick cash infusion without taking too much debt. Talk to a financing company, like Lavan Financial Group, today for more information.