How You Can Increase Cash Flow with Accounts Receivable Financing
Any small business which is looking to grow and achieve greater success must first be able to manage its cash flow, so that a positive bottom line is achieved. There are two great ways that this can be accomplished for businesses which generate a lot of invoices, by factoring and by accounts receivable financing.
While both will put immediate cash in the hands of a small business owner, there are some distinct differences between the two products, which might make one or the other more appealing for your business.
Accounts receivable financing vs factoring
While most people consider these two terms to be interchangeable, there are some important differences between the two financial products. Factoring is the more traditional of the two, but it typically only advances about 80% of the face value of invoices to the company owner. The factoring company which purchases the invoice would then become responsible for collecting on those unpaid invoices. Factoring is also limited to invoices for domestic customers, and does not include clients from different countries, which could be a serious drawback for some companies.
On the other hand, accounts receivable financing provides for cross-border financing at very appealing rates, often with as much is 100% advanced payment of invoice face values. It is also not necessary for any company to sell all of its invoices, since financing is undertaken on selected invoices only. This means any company wishing to sell its invoices can choose which ones they want to sell to an alternative lender, rather than being obliged to sell off its entire inventory of available invoices.
In both cases, the business owner would receive an immediate sum of cash in exchange for some or all of its sold invoices, at which point the purchaser would assume the responsibility for collecting on those unpaid invoices.
Accounts receivable financing with Commercial Capital Lending
If your business is one which typically generates a high volume of invoices, you may be interested in arranging for accounts receivable financing. We will be glad to help set this up for you at Commercial Capital Lending, so you can start receiving the benefits of having immediate cash for your invoices.