Accounts receivable loans are owed by customers to the business; amounts owed to a business for goods and services sold by the business but not yet collected. A key factor in analyzing the liquidity of a business is the ability to meet current obligations without additional revenues.
Need immediate capital? Sell your receivables to a “Factor” at a slight discount.
Accounts receivable loans (also called Invoice Factoring) are an expedient means of acquiring working capital by selling the invoice (accounts receivable) for a product or service that has been rendered. Despite the advantages of factoring, many businesses do not utilize this financing tool due to a lack of awareness or misconceptions about how it works.
Reasons to Factor:
- Ability to take advantage of vendor discounts
- To have funds for payroll and taxes
- Extend credit to customers on large orders
- Buy equipment or inventory on demand
- Obtain a source of working capital
- Relief from responsibility for collection of no-pay and slow-pay clients
- Fill more orders
- Flexible funding program that increases as you increase your sales