How accounts receivable financing lends itself to company growth
Accounts receivable financing is a powerful tool that provides upfront payment to businesses on their outstanding invoices. Thereby, helping avoid cash flow problems as well as providing the avenue and resources for growth. Are you a business owner with cash flow issues and a desire to grow your business operations? You should look at accounts receivable financing as a means to safeguard your business. Kore Capital explains in greater detail.
Types of accounts receivable financing
Accounts receivable financing can be used to solve cash flow issues and obtain the necessary assets for growing your business. The two types of accounts receivable-based financing are factoring and asset-based lending.
In this form of financing, the business pledges its collateral which in this case is accounts receivable to secure advances under a revolving line of credit.
This type of financing involves access to capital based on outstanding invoices from clients. Businesses who apply need to provide the following:
- Firstly, demonstrate the ability to provide the services they have been asked to provide by their client
- Secondly, credit Worthy Customers
- Lastly, demonstrate that they own the accounts receivable assets free and clear of compering claims
Benefits of accounts receivable financing for business growth
Accounts receivable financing can enhance business operations and growth. Read on to find out how:
- Businesses can get quicker access to money. Because accounts receivable financing companies typically advance within 24 hours of receiving a qualified request.
- This type of financing is proportionate to sales and assets. It gives businesses access to capital in amounts that continue to grow as the business grows.
- Businesses can improve their credit rating. Because accounts receivable financing improves cash flow and helps business owners from accumulating past due bills.
- Managing cash flow and business expenses is easier. Because accounts receivable financing provides detailed management reports from the accounts receivable financing company.
- Assistance with cash flow management. An accounts receivable financing company can manage invoicing and billing.