Sudden bills can put a strain on small business finances. If you’re struggling to make a payment, facing a late charge or just uncomfortable tying all your working capital into payroll and other expenses, discover how accounts receivable financing can give you the flexible funding you need to improve your cash flow situation. Here are four great benefits you can enjoy when you finance your accounts receivable.
1. Meet Deadlines
Your financing will arrive far sooner than typical invoices. Instead of waiting for months for your payment, your lender will provide you with fast cash within a few days. While you may not receive the entire amount, you’ll enjoy the flexibility of cash in hand, rather than waiting and hoping your check will come in on time.
2. Reduce the Risk of Losing Collateral
Unlike a bank loan or line of credit that needs to be secured to an asset, your accounts receivable financing uses the invoices themselves as collateral. That way, even in a worst-case scenario, you won’t have to worry about losing your property, inventory or essential equipment. Even with an asset-backed loan, your small business may struggle to receive the loan or line of credit that you need.
3. Avoid Credit Checks
Your lender won’t base their decision on your credit score but will check your customer to ensure that they’re a reliable account. This means that you won’t have to worry about your credit score. Many small business owners have a low or missing credit score. Until you build up the financial clout necessary to be approved for lines of credit it can be difficult to find a versatile funding option for your slow seasons or unexpected bills. Missing out on a payment can also severely lower your credit score. If you’re looking for ways to build your credit, use accounts receivable financing for a fast and easy way to improve your score.
4. Reduce Debt
Business loans can quickly cripple small businesses with large amounts of debt, high interest rates, and difficult monthly payments. If you’re concerned about long-term financial commitments and accruing interest, financing your accounts receivable allows you to receive financial assistance without taking on more debt.
These are just four benefits for using accounts receivable financing. Consider how you can benefit from this versatile financing option, and shop for the best terms and most flexible contracts today. Use your cash today to create a thriving business.