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 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) is 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 lack of awareness or misconceptions on 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