How To Borrow Against Your Accounts Receivable

How To Borrow Against Your Accounts Receivable

How To Borrow Against Your Accounts Receivable

Accounts receivable financing is the ultimate solution for your cash flow problems. Unfortunately, a lot of businesses lose business or incur inefficient debt because they don’t understand that this type of financing is available to them. We’ll explain what accounts receivable financing is and how it works so you can easily gain access to funding. Learn how to borrow against your accounts receivable here.

What Is Accounts Receivable Factoring?

Accounts receivable factoring is a way that businesses can borrow money against their accounts receivable. In effect, a factoring company will purchase your unpaid invoices and give you a portion of the money you need at a discount.

How Does Accounts Receivable Financing Work?

  • Apply for funding with an accounts receivable company
  • Submit your invoices with your account receivables total
  • You’ll receive a percentage of the invoice from the accounts receivable company (the percentage will depend on several factors determined by your invoice factoring company)
  • The client will pay the invoice amount owed to the lender
  • The accounts receivable company will deduct their fees and pays you the remaining amount

What Is The Difference Between Accounts Receivable Financing and Factoring?

When you choose accounts receivable factoring options, the factoring company will purchase your invoices and collect payment for you. In effect, they are fully responsible for the collection of payments.

With accounts receivables financing, your accounts receivable will be used as collateral for the loan. For example, you can use the value of your equipment or a percentage of your inventory cost to gain funding. You will be responsible for payments for unpaid invoices on your own. 

Benefits of Your Accounts Receivable Financing and Factoring

Both accounts receivable financing and factoring are powerful tools to help you to gain funds quickly. You can pay off debts, settle your outstanding invoices, buy materials for your business and pay your staff without having to wait for capital or take out a loan. 

To find out about Kore Capital’s accounts receivable financing and account receivable factoring options, give our team a call today!

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