4 Benefits of Factoring and A/R Financing

When you own a business, having a steady cash flow is important to keeping everything running smoothly. However, there are some circumstances that can result in your company having less available funding than you expected. Perhaps the business has been a bit slower than usual or your clients are having trouble making their payments on time. If this becomes a problem, then factoring, or accounts receivable financing, might help. The following are a few benefits.

1. It Is Easier to Get Than a Loan

While getting a loan from a bank might be the more traditional way to get funding, it is not always available to smaller businesses. Banks may be hesitant to lend you money if you don’t have a long business or credit history. A low credit score can hurt your chances as well. With factoring, your approval is determined by the worth of your invoices.

2. It Allows You to Grow Your Business

Even if you are not in any financial trouble, accounts receivable financing can still be helpful for your business. The success of your company often depends on growth, and you need money to do that. You can use these funds for a variety of expenses, from paying off debts to opening an additional store to purchasing new equipment.

3. You Can Get Funding Quickly

With some types of financing, such as a traditional bank loan, you may be waiting a while for your money. It can take months to be approved for a loan which can make things difficult if you need cash now. After applying for accounts receivable financing, you will usually only need to wait a few days to find out if you’ve been approved. You will then have access to your funds within the next day or two.

4. You Can Be More Flexible With Your Customers

Using this kind of financing can make things easier on both you and your customers. You will have access to the funds you need while they can take a little bit longer to pay. This might not seem like much to you, but this added flexibility can make current customers more likely to continue using your business. It can also attract new clients over time.

Factoring can be a great financial tool for your business. It offers a quick and easy way to get funding and can benefit your customers as well. If you are unable to or are not interested in getting a loan, then accounts receivable financing is something to consider.

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