Why Small Businesses Should Consider Accounts Receivable Financing

Businesses which sell goods or services to customers, and which invoice these customers for payments, have an easily accessible financial tool available to them called accounts receivable financing. Often simply called AR financing, this type business loan is an easy way to secure access to funds to use however your business may need.

Here are just a few reasons small businesses should consider AR financing. 

No Other Collateral Required

When your business chooses to find funding using its accounts receivable, this is the only collateral you will need. Either your invoices act as collateral against an asset loan, or you sell your unpaid invoices to a financing company, who takes a percentage of the money collected from you customer and pays the rest to you. Either way, you will not have to worry about losing important, valuable assets such as large equipment or property when you use AR financing.

Get Your Cash Fast 

Getting approved for a conventional small business loan can be a lengthy process. Often times, getting from application to funding can take weeks, if not a couple of months. If your business needs to increase cash flow much sooner than the time it takes to process a term loan, consider accounts receivable financing. The turnaround time on this type of financing is usually just a couple of days, to a couple of weeks, giving you access to that much needed cash much sooner. 

Your Credit is Less of an Issue 

Banks tend to have very strict credit standards, but AR finance companies are usually less concerned with your personal credit than they are with the credit of your customers. This makes using your accounts receivable to get financing easier for newer or smaller businesses with little in the way of established credit. 

Use the Cash Where You Need It

Term loans can often come with restrictions or designations for the use of the loan funds. Whether you need to cover payroll, inventory or some other unexpected expense, AR financing doesn’t come with requirements for how the money you receive must be spent. Use it however or wherever your business needs it the most! 

Accounts receivable financing is a type of business financing using a business’s outstanding invoices as collateral. It’s an ideal option for new or small business, which doesn’t require any additional credit, offers funding faster than a term loan, are easier to qualify forand offer more flexibility in terms of use. 

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