
Whether you are a machinist
operating out of a garage or a
staffing company placing hundreds of workers
in the largest firms,
you undoubtedly face cash flow dilemmas from time to
time.
The uncomfortable ritual
of making incoming cash receipts
stretch to cover short term obligations
frustrates even the
most seasoned business
managers.
In recent years, an
increasing number of companies
have discovered that account receivable funding can combat the ups
and downs of unpredictable cash flow
cycles. More importantly,
factors are providing the small business community with a viable
source
of working capital when conventional financing is not always an
option.
Currently, several billion
dollars in account receivables are
factored in the United
States each year.
Historically, the bulk of account receivable funding was predominately in the textile,
furniture and apparel
industries. Today, account receivable factoring
firms are working with all types of industries, including:
manufacturers,
service providers, transportation companies and high
technology firms.
as growing
firms continue to prosper,
suppliers and contractors are looking for additional sources of working
capital
to accommodate increased sales volume. T
The overall increase in account receivable financing volume
is mainly attributed to the credit
crunch in the late 80s.
As the availability of
bank commercial credit tightens, more businesses
Account receivable financing companies can help those firms that banks often find difficult
to approve such as start-up companies whose
growth outstrips cash.
The primary focus in a account receivable funding relationship is the credit-worthiness
of the customers being
invoiced and the client’s ability to produce
a quality product or
service. Simply put, if the business
has an
acceptable product or service that it provides to a creditworthy
customer then the business is a candidate for account receivable funding .
How Does Account
Receivable
Funding Work?
1. What is account
receivable funding?
Account receivable
funding consists
of converting a company’s accounts
receivable into
cash by selling invoices
to a factoring company at a discount.
Account Receivable funding is
a valuable financing option for
companies
who are just starting out or who
are experiencing a period of
rapid growth.
Because account receivable funding
companies rely on being paid by your customers,
your own financial history
does not have
any bearing on your qualification.
Most importantly,
account receivable
funding allows your company
to stop worrying about
cash flow
and start focusing on what really matters
in a business —
operating it.