Things can change unexpectedly when running a small business. If you ever need working capital quickly, you need to know what your options are.
Many small businesses might encounter situations where traditional small business financing through loans or lines of credit will be unavailable or insufficient. At times like these, some business owners use financing known as accounts receivable financing.
What is Accounts Receivable Financing?
Accounts receivable financing (or ‘factoring’) is a process where a business sells their outstanding invoices or receivables at a discount to a specialized finance or factoring company (usually called “the factor”). The factor will assume the risk on the receivables and in return will provide a quick influx of cash into your business. Instead of getting paid the full value of the invoice, your business gets an immediate cash payment by selling the rights to be paid, by the person or company that you originally invoiced. The balance of the value of the invoice, after the initial payment by the factor and their fee, is subsequently returned to the business once the invoice(s) are paid in full.
Factoring is one of the oldest forms of commercial finance. Accounts receivable financing is also known as accounts receivable factoring or accounts receivable funding.
The benefits of Accounts Receivable Financing include:
- Fast Cash
- Freed Up Working Capital
- Time saved not worrying about customers paying
- No Collateral
- Retained Ownership of Business
- Your Own In-House Credit Team
At Perenica Commercial Capital, we believe in your business’ ability to succeed. We are passionate about helping you in whatever situation you may find yourself. We also believe that every loan should be unique, because no two businesses are the same. If you turn to Perenica Commercial Capital, we will work with you to develop a financing plan that suits your needs exactly.