Even the most thriving companies can have difficulties with customers paying their bills on time. Sometimes extended payment terms are the compromise you need to make for getting that extra business from a client, even at a difficult cost on your business operations.
Being unable to access funds that are due to you can hamper a business’ ability to make improvements, process payroll or make other payments. Invoice factoring uses a third party to extend money on behalf of your clients while still maintaining those important relations.
Here’s how it works:
1. Your business invoices customers as usual
2. You take those invoices and submit them to the financing institution
3. Funds in the amount of those invoices are sent to your business directly
4. The financing institution receives payment from the customers according to certain terms
Also called “accounts receivable factoring”, this form of financing is a secure way to get immediate cash by essentially selling your accounts receivable program. More direct than a business line of credit, the financing institution takes over your bills for you, working with your creditworthy customers while allowing you freedom to actually use the money.
Advantages of Invoice Factoring
- Unlimited working capital
- Payment in as little as 24 hours
- Easy to qualify
- No restrictions on use of funds
- Potential to improve credit rating
Who Can Benefit from Invoice Factoring?
Small and medium sized businesses in particular can benefit from this type of financing, as it trades existing invoices for workable capital that is already your own. This is often a viable option regardless of your credit rating, as you have a tangible amount in the form of an invoice. Some customers wait as long as 60 days or more before paying that bill, leaving your business strapped for accessible cash. Outsourcing your collections gives your business fast financing without taking a toll on your credit or straining relations. This way your company can thrive with available working capital, while enabling your clients to succeed.
It can be a simple and painless process to learn about and utilize invoice factoring, obtain business loans for bad credit, or apply for unsecured loans in an economic downturn. Advance Funds Network has been providing quality financing options to small and medium sized businesses since 2007, enabling companies to rise to their full potential through use of their working capital. Selling your accounts receivable to AFN gives you fast access to your funds and opens up the possibilities for you as a business. Never again worry about pursuing a customer for payment or hesitating before making extended payment term arrangements with quality clients. With AFN, you can have your money and keep your business relations too.