If your business is like most, you have customers that pay their invoices in 30 to 60 days, which can put a strain on your cash flow. Accounts receivable (A/R) funding can help by providing you with cash within 24 hours of invoicing your customers, so you don’t have to wait for payments to come in.
What is Accounts Receivable Funding?
Accounts receivable funding is a type of short-term financing that allows businesses to sell their A/R at a discount in exchange for cash upfront. The funding company will then collect payment from your customers on your behalf, minus a small fee.
accounts receivable funding can be a great way to get quick cash to help your business grow or cover unexpected expenses. However, it’s important to understand how the funding process works before you sign up. Make sure you know what fees you’ll be charged and how your customers will be contacted. You should also have a plan in place for how you’ll repay the funding company.
Benefits of Accounts Receivable Funding
There are several benefits of using A/R funding to improve your cash flow, including:
1. You Get Paid Sooner
With A/R funding, you don’t have to wait 30, 60, or even 90 days to get paid. The funding company will advance you cash within 24 hours of invoicing your customer, so you can have the money you need when you need it.
2. It’s Flexible
A/R funding is a flexible financing solution that can be used as needed. You only pay for the funding when you use it, and there are no long-term contracts or commitments required.
3. It’s Easy to Qualify
Unlike traditional loans, A/R funding is easy to qualify for. Funding is based on the creditworthiness of your customers, not your personal credit score. As long as you have customers with good credit, you should be able to qualify.
4. There are No Restrictions on Use
With A/R funding, you can use the cash for any accounts receivable business purpose. There are no restrictions on how you use the funds, so you can use them to cover operating expenses, invest in new equipment, or anything else.
5. It Improves Your Cash Flow
A/R funding can help improve your cash flow by giving you the cash you need to cover expenses and pay bills on time. This can help you avoid late fees and other penalties, and can help improve your overall financial health.
If you’re looking for a way to improve your cash flow, A/R funding may be the right solution for you. It’s an easy and flexible way to get the cash you need, when you need it, without having to wait for payments to come in.