In Accounts Receivable Factoring

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After long negotiations, your star salesperson closes a big sale to a new client. This is a big enough sale that it could easily make your year. There is only one minor catch – your potential client is asking for 30 day terms. They will pay your invoice 30 days after receipt, at the earliest. In the meantime, you need to cover all costs of the sale (products and services) plus all your business costs. Should you make the sale?

It’s a tough question to answer. If you are confident that your client can pay the invoice, then making the sale is probably a good idea. If you are not confident they will pay, then you should be careful, and remember that it’s only a true sale if the client pays. Good due diligence and credit checking can help you make the best decision.

How can you determine if your new client will pay? The best way is to allow A/R Funding to use its resources and due diligence to establish credit limits.

Net 30 sales present another challenge as well: What if you want to make the sale but cannot afford to wait 30 days to get paid? If you have that challenge, you should again consider A/R Funding. We can factor the invoice and wire the money to you immediately. The quick payment by A/R Funding enables you to offer net 30+ day terms with confidence, knowing that you can obtain the funds from the sale immediately and not have to wait the 30 days or longer for your customer to pay.

When you factor an invoice you will receive two advances from A/R Funding. The first advance is given upfront, as soon as you invoice the client, which can be between 80% and 90% of the invoice. The second advance (10% or 20%), is wired to you once payment is collected.

One of the many advantages of A/R Funding is that your working capital is dynamically tied to your company’s sales. This enables you to grow your business and keep up with your competition. We can also finance many business start-up situations where your existing financing source is unable or unwilling to provide you full financing. We understand temporary downturns in business and stand ready to work with you and your bank.

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