In today’s economy, businesses know that in order to remain competitive, they have to offer their customers credit terms. Buying goods and services on credit means that businesses have to produce and sell their wares and wait anywhere from 30-90 days or more to receive the money. For large businesses that are well capitalized, this generally isn’t a problem. However, for small businesses or those that are just beginning to make their mark on the marketplace, this delay in funding can cause a real problem in the cash flow cycle and the business’s ability to continue operations.
In older times, businesses had few choices when it came to addressing the cash flow shortage. Either dig into their personal bank accounts to float the company until their customers began paying or head to the bank for a business loan. Most business owners have little equity that they are willing or able to risk in their businesses. Many started their companies with their own money and are lucky if they have recovered their initial investment. And getting a bank loan was difficult, time consuming, and resulted in the addition of more monthly obligations that have to be paid.
The good news is that today, business owners have options. When it comes to raising capital, for businesses that offer goods and services to customers on credit, there is an option that is easy to qualify for, even easier to get funded, and does not require any repayment. They simply Sell Accounts Receivables for a lump sum of cash.
Selling accounts receivable offers businesses a new avenue for finding the cash they need to continue business operations. In this type of arrangement, a third party company, known as a factor, will review the open invoices and assign them a value based on their ability to be collected in full. The better credit quality the customer holds and the fresher the invoice, the more valuable they are to the factor and the more money they will offer for these invoices.
When the offer is made to the cash strapped company, it can accept the offer and close the deal, receiving funding in just a few days. Or they can decline the offer, keep the invoices and find funding elsewhere. There is no obligation to sell accounts receivable, even after the application has been made.
What makes selling accounts receivable so attractive is that businesses from all industries can qualify, regardless of credit or length of time in business. Because this is not a loan, there are no repayment obligations, so there is no impact to the business’s financials and because the outstanding invoices are moved off of the balance sheet, it actually improves the financial standing of the firm.
Universal Funding Corporation is a leading accounts receivable factor and can provide your business with the money it needs in order to keep things moving forward. If your business is need of fast cash, they can help. For more information regarding the services offered by Universal Funding Corporation, please visit www.universalfunding.com.