Grow Your Company without Incurring Additional Debt
Many business owners agree that access to funding is the biggest limitation they have when trying to grow their business. Lack of cash flow is a common obstacle often caused by practices like 60-day payment terms on invoices. Long payment terms can force companies to use their own resources to cover expenses while waiting for customers to pay. This practice can not only prevent growth, but if not managed properly, it can also put a company out of business. Conventional financing is one option to acquire funding, but it normally comes with lengthy terms, high interest and hefty loan payments.
Fortunately, there are ways to increase your cash flow without having to use a business loan:
Early pay incentive
A common practice is to offer a 2% discount on invoices paid within 10 days. The problem with this strategy is that you are still at the mercy of your customers because they may or may not take the discount; if they do, there are no guarantees that they will pay in terms.
Factoring can provide quick working capital based on the creditworthiness of your customers. Factoring is an advance on your company’s accounts receivable, in which a factoring company buys your invoices at a small discount and pays you up front for them. This eliminates the problem of having to wait for customer payments, and also strengthens your cash flow. Factoring can be used as a platform to grow your company without incurring additional debt. An important feature of factoring is that it is not considered a business loan, but simply an advance on an existing asset of your business.
At A/R Funding, we can help you access debt-free working capital by converting accounts receivables into cash with a simple rate structure and no long-term commitments or contracts.