How accounts receivable funding can increase your ROI
For several businesses, especially start-ups and small businesses, funding can be difficult to obtain. They also find it tough to be approved for bank loans. This is because they do not meet important criteria. Criteria can include how long they have been in business or the value of current assets. Not just that, but getting a bank loan is also a time-consuming process. This time to process may not be feasible for current projects or needs. Some businesses require their customers to pay within 30, 60 or 90 days. This can result in the inability to produce the ready cash needed to venture into new business opportunities. However, Kore Capital explains having accounts receivable funding can help in the long run and increase profits.
Accounts receivables funding
In simple terms, accounts receivables funding or financing provides a business with an immediate cash flow against its accounts receivables. Companies who provide this type of funding do not need assets or collateral to provide the cash. Instead, the funding companies look at critical factors such as how credit worthy the businesses’ clients are, do they have good profit margins and how solid their business plan is? So what are some of the benefits a business enjoys due to accounts receivables funding and how it can increase ROI:
- A business can receive immediate cash to embark on new business plans.
- The funding increases a business’s purchasing power, providing greater opportunities to boost profits.
- The business does not have to hound its consumers for overdue bills and reduces time spent on unnecessary bookkeeping. It can now use this extra time to build on projects and plans as well as its clientele.
- A business can avoid bad debt or credit risks through accounts receivables funding.
- Additional invoice factoring can help the business build their credit.
- Usually, the funding companies also provide assistance with professional collection on overdue invoices so their clients do not have to handle it.
- Through accounts receivables funding, a business can reduce overall costs by purchasing in bulk or by receiving early payment discounts.
For more information on how accounts receivables funding can help your business, contact Kore Capital today!