Accounts Receivable Financing: Tapping into this Hidden Asset

By: Ryan Attelle

Have your efforts for a bank loan come to a dead end? Are you having difficulty accepting new business because you don't have enough funds? Are you experiencing drained cash flow due to credit term sales of net 30, 60, or 90? If you find your self answering yes to these questions you might want to take a closer look at accounts receivable financing.
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Almost everyone is aware that it takes cash to run a business, and to run that business smoothly the cash needs to be flowing smoothly as well. A business needs cash to ensure that there payroll if properly filled. A business isn't going to be able to keep good employees when they cant pay them on time. Cash also enable a business to keep plenty of inventory ready to go. There is nothing worse than being able to sell more product than is available on hand. Lastly most businesses rely on vendors for supplies and services to keep them going. Lack of cash can cause a disruption in this creating even more problems and profit loss all around.

If a business is struggling with cash flow there are few immediate options available. They can find investors that are able and willing to add funding to a business. A business can also attempt to quickly convert there receivables to cash. If they can not do this on there own or simply don't know how or where to go then they might want to consider a short-term financing option like accounts receivable financing.

Of course all of this is worthless with out a structured and rigged plan of action. 2013 should be the year of planning ahead. A solid game plan can greatly help a business fully understand there finances and how to get them to better work in there favor. A great way to get organized and keep the cash flowing is accounts receivable financing.

So what is accounts receivable financing exactly, well its pretty simple actually. It is a form of short-term financing where a business sells there receivable. These receivables must come from other businesses that hold good credit ratings. When an invoice is paid in full the factoring company is repaid and the original business gets the remaining balance.

A lot of businesses are turning to accounts receivable financing because it is proving to be difficult to borrow from a bank. No only that, if a business is lucky enough to get a loan they soon find them self in debt. In the end it may hurt cash flow rather than improve it. There is no real cost associated with factoring less the percentage that is deducted from the invoice being factored. Many find that it is a little price to pay for lots of extra wiggle room.

Accounts receivable financing is typically easy to set up, often available on line and ready to go with in a few days of application. Utilizing accounts receivable financing relives stress over waiting for payment from customers that are 30 to 90 days old. Accounts receivable financing gives businesses the cold hard cash they need in hand to place orders, pay employees, and keep inventory at healthy levels. 2013 is a new year, businesses can start it off with an improved, stress free cash flow arrangement.

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