February 19, 2017. In accounts receivable financing, products or services your company has already produced and delivered are funded today. Your business no longer has to wait 30 to 45 days to be paid.
Accounts Receivable Financing
What is Accounts Receivables Financing?
Account receivable financing dollar amounts as low as $5K are reviewed. We will explain how the process works, the features and benefits and how accounts receivable financing assists a businesses cash flow.
What are Accounts Receivables, or what is an Account receivable?
Accounts receivables is money that your business is waiting to get. Your business has provided products or services to another company. An invoice has been sent to your customer asking them to pay. This is now an Account Receivable.
How can I get my Accounts Receivables paid? How do I get money for my Accounts Receivable?
We work along side your business with the set up, including the contact of your customers. Our staff has expertise in seamlessly contacting the payables department of your customer to cause your business no conflict or issues with your valued relationships while setting up accounts receivables financing.
How does Accounts Receivables Financing work?
Sample recent Accounts Receivables Financing Transaction
West Coast Underground has just completed underground piping work for the City of Sacramento. The cost of the work is $100,000 and West Coast Underground has invoiced the City for $100,000. West Coast Underground has worked with this customer in the past, and the client does not normally pay for 30 to 60 days after invoicing.
Having to wait 1 or 2 months causes cash flow issues for West Coast underground in their efforts to begin the work on jobs for other clients and to seek out new clients. As a result, West Coast Underground applies for Accounts Receivables Financing. West Coast completes a short application and provides an Accounts Receivables aging schedule.
Based on the qualify of the aging schedule, West Coast underground qualifies for Accounts Receivables Financing. The City of Sacramento, who is familiar with this financing is contacting and the payables process is set up. Within 2 business days, West Coast Underground is advanced $80,000. Upon payment of the invoice from the City of Sacramento, West Coast is advance the remaining $20,000 minus the financing fee.
West Coast chooses to use this financing for every job it completes with the City and also with some other clients. Within 1 month, their cash flow situation improved dramatically. They are now able to immediately purchase raw materials, hire labor and immediately begin other jobs. They can solicit new clients for for future jobs through some advertising programs due to West Coast’s increased revenues through accounts receivable financing.
Frequently asked Accounts Receivable Financing Questions:
Question: Won’t my business look cash poor if my customers are contacted to set up an accounts receivable financing line?
Answer: Not at all, for several reasons.
1) There is a very high probability that many of your customers that pay you are already familiar with the process. Chances are they have been providing this service to customers (Like You) currently and in the past.
2) For many of your customers that have not paid you yet, there is a significant probability that they are paying their vendors and contractors in 30, or even 60 days. They are well aware that cash flow issues their vendors and contractors have are at least in some part a result of their not paying when the work is completed! So they know it is not your business that is the problem, it is the fact they are waiting to pay you! As a result, they are comfortable that their vendors and contractors will use accounts receivable financing.
3) Even with the above, a business owner can simply have their accountant contact the Accounts Payable department of the companies they invoice. The accountant will present the call as they have advised their client to pursue accounts receivables financing. If needed, the accountant can indicate that for cash flow reasons, they are advising their client to do so?
Question: Is it hard to qualify?
Answer: The main criteria to qualifying for Accounts Receivable Financing is the quality of the company for which the invoice is outstanding. If the company that is paying the invoice is strong, this type of financing can generally be approved.
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