In every business, building your customer base is crucial. And one way to do this while increasing revenue is to extend credit to your customers. But you have to remember that when you have the majority of your sales on the accounts receivables then you know that the funds that you need will not be available. The solution? Simple. It’s Financing receivables.
What is Financing Receivables?
Also known as the accounts receivable financing, is one of the quickest ways to convert your businesses’ sales receivables into cash that you can use anytime you need it. If you choose to use accounts receivable financing or ‘invoice financing,’ it is when you sell the unpaid invoices of your customers to a third-party factoring company.
And when the shipment is completed and the customer is invoiced, the factoring company will then pay you 70% – 90% in advance of the total value of the invoice. Once the customer pays the factoring company, they will send you the remaining balance. There are now a good number of factoring companies in illinois that you can choose from.
Funding Your Accounts Receivables
For a small or huge business, sales are crucial. The more sales your company has, the better it is for your business. The last thing that you want to do is to lose a sale with a customer just because you only accept cash payments. That is why many companies these days are now offering their customers various payment options. So if you know that you need to offer credit card payments to have more sales, you must know what invoice financing is all about. And how it can benefit your business.
Benefits of Using Financing Receivables
Since companies now have options for 3rd party factoring services, many are seeing the benefits that it can provide. One of the significant benefits of invoice financing is that you can get the money owed by your customers on time. Also, you are selling your invoices and you are not borrowing money from other companies that you can be in debt with their high-interest rates.
When to Consider Financing Receivables
It is crucial that you know whether or not you should consider accounts receivable financing. This tool for your business can be highly valuable if you know what you are getting yourself into. If you have a startup company or if you are struggling to recover from a deep setback, then you can surely take advantage of this solution for your business. You are selling the receivables instead of loaning money that comes with an interest. So with that, factoring companies will not require you of a credit history check. You will also not worry about paying loan payments.
So if you think that this is a good option for you, then go ahead and find the best factoring company for your business. This might just be the solution that you need right now to keep your business afloat. Even those companies with tax aliens or have at the brink of bankruptcy can also benefit from receivables financing.