No doubt, cash is key to running a business. Without cash, a company can’t pay its expenses in a timely manner, serve new customers, expand its territory, or embrace new opportunities. Some sources of capital are considered long-term. Other short-term capital solutions can be obtained more quickly. Among these, accounts receivable financing can be an excellent solution.

What Is Short-Term Capital?

Short-term business financing is focused on addressing the time-sensitive funding needs of the business. It is considered “short term” because the money is needed quickly, and any loans are repaid in 3-18 months. Funds are typically available almost immediately for important working capital needs. Accounts receivable financing can meet these needs.

How Can Short-Term Financing Be Used?

One of the advantages of short-term financing is that lenders do not control how the company uses those funds. Uses can include:

• Buying inventory or equipment. 
• Deploying marketing campaigns. 
• Facility renovations. 
• Expanding locations. 
• Paying employees. 
• Retiring or consolidating debt. 
• Preparing for seasonal rushes. 
• Seizing growth opportunities. 
• Handling emergencies.  

Why Is Accounts Receivable Financing Attractive?

Accounts receivable financing is attractive because:

• There is no need for collateral. The accounts factored are assets of the company with the value of their own. 
• There is no interest applied and no repayment timetables as with various types of loans. 
• This type of funding is typically easy to qualify for and obtain. 
• Typically, funds can be deposited in about 24 hours.  

Steps to Set-up Accounts Receivable Financing

Accounts receivable financing is set-up in the following steps:

• The factoring company does due diligence on your company to begin the account set-up, checking such things as your customers’ credit, receivables aging, presence of any liens, and payment of current taxes. 
• Select the clients and receivables to be factored. 
• Verify the receivables with the selected customers. 
• Financing the batch of receivables. 
• Processing payments and settlement.  

Seek Expert Financial Assistance

Contact Increase Lending for financial solutions that will help your small business achieve success. Our financial professionals can help you secure funding to meet your business’s financial needs.