As a business person, the last thing you would want is to see your entrepreneurial operations shut down simply because you have unpaid invoices. The leading cause for the delay in operations is a lack of proper cash flow due to your customers’ debt. Fortunately, there is a way out through getting accounts receivable financing, also known as factoring. This is where you contract a factoring company to handle your unpaid invoices and the firm provides you with cash to keep your operations running.
The Pros And Cons Of Accounts Receivable Funding
Getting a traditional bank loan to maintain a steady cash flow in your enterprise can be demanding in terms of qualification requirements. You will be required to have a positive credit rating and valuable collateral. You do not need all that when it comes to factoring.
Retaining Business Ownership
A factoring company will not take any part of your business like other lenders may do. All such a firm wants is to claim your unpaid invoices at a fee and finance your operations. Therefore, you remain the final decision maker in your company.
When you contract with accounts receivable financing company, you can be sure of getting the money you need in a short period. Some firms can even provide the necessary funding within 24 hours.
Some factoring firms can give you short and viable agreements, but others can be long and winding. That is why you should negotiate the best contract length that suits you and your enterprise.
It Can Be Costly
Accounts receivable financing is a fast way to get cash to keep your operations going. Nonetheless, it can sometimes be costly, especially when you look at the rates you get charged on other business loans. You will have challenges repaying the credited amount if the business is down. That only means that you will have to pay more because you failed to clear your debt within the predetermined period.
Running an enterprise means you should be vigilant, primarily regarding invoice clearance. It is recommendable to talk to Means Commercial Capital if you want to get the best financial help for your business.