Chris Virgin explaining the Numerous Conveniences of Accounts Receivable Financing
Chris Virgin reviews the creator and executive producer of The #AskChrisV Show an educational, inspiring show on Facebook Live and Youtube Live about personal finance, investing, career and business.
There are many accounts receivable financing advantages. Businesses the need capital will be hard-pressed to find a much better or faster option. Such financing is not dependent upon a businesses’ credit or the length of time that they have been in business.
As long as a company has clients with good credit and outstanding invoices, then accounts receivable financing is a viable commercial financing option. Below, we will go into a little more detail about only a few of the many advantages of generating capital in this manner.
Fast money
Accounts receivables financing is a really great way to get money fast. Most factors are able to provide payment for invoices in about 24 hours. This process may initially take more time.
However, after a business has established a relationship with a factor, the process goes really quickly. Unless a company has an open line of credit, it is difficult to think of a faster way to raise commercial capital. Even in cases where a line of credit is utilized a company is forced to pay interest which can be extremely expensive. There are no such costs associated with receivables financing.
Easy money
Accounts receivables financing is easy money. When a business desires to get a bank loan, it must be willing to jump through hoops. They will need to have all of their financial documentation in order. For a small business, this might require an unpleasant trip to the accountant. They then must also be ready to answer any questions a bank has. If they are unable to satisfactorily do so, then they won’t qualify for the loan. Also, many banks won’t loan money to new businesses, these are often the companies that need it most.
Today, it is even more difficult than in the past to receive bank financing. Banks simply aren’t willing to part with their money right now. They are turning down loan applications from businesses with good credit and that have been in business for a long time.
Commercial financing has become more difficult than ever to secure, though not in every sense. Accounts receivables financing is a pretty easy way to get money. As long as a business has outstanding invoices owned by clients with good credit, they may be able to qualify for monies.
A business credit score doesn’t matter
If a business has any chance of receiving a bank loan, it must have a good credit score. In this day and age, they just might need an excellent credit history with no blemishes. Fortunately, businesses that utilize accounts receivables financing don’t have to worry about this. A factoring company is more concerned about the credit history of the invoiced clients than the company that owns those invoices because that is who they will be collecting their money from.
