Accounts Receivable Financing

Written by Jill Morrison
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Many small businesses solve cash flow problems by utilizing accounts receivable financing. Usable cash is often tied up in accounts receivables. Lenders will provide financing based on the amount invoiced to customers so that small businesses have a better opportunity to grow and prosper. Two options available are line of credit loans and factoring.

Outline of Accounts Receivable Financing

The amount of a line of credit is based upon the amount of receivables due. Factors which influence the amount or terms of the loan are experience in the industry and business credit history. Many lenders offer financing to all industries at very competitive rates. Cash is often available in 24 hours. There are programs available for companies who are losing money or who are in bankruptcy.

Another popular method of accounts receivable financing is factoring. This is a flexible solution that improves cash flow and credit rating since it is not considered a loan. Credit history of the business is not considered. Invoices are sold to a factor who collects a fee. The factor is responsible for collecting payment, which saves the business valuable time. Receiving payment early allows businesses to pay suppliers promptly, often qualifying for early payment discounts.

Lenders offer expert advice and innovative cash flow solutions for small businesses. Accounts receivable financing, whether in the form of factoring or a loan, will provide many benefits to promote growth and profitability for struggling businesses. Customized programs will fulfill the needs of most entrepreneurs.


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