When you have a remodel or expansion to do for your company, you need money quickly to pay the experts who will be doing the work. You can get a loan, however, you will need to pay back what is owed over the next few years. Accounts receivable financing gets you the money that you need with little debt afterward. Here are a few ways factoring can affect your business.

You Can Implement Factoring with Any Type of Credit

One concern small business owners have when they apply for a loan with their bank is the credit rating they have. This score can fluctuate due to circumstances they have little control of, such as a natural disaster or emergency within their facility. However, when they consider requesting accounts receivable financing, this piece of the lending process is omitted from consideration. When the factoring organization agrees to collaborate with them, they will want the information on the money that is owed to them. These invoices that the company sends to their clients become collateral on the money that is lent out. The customer who received the products or services may have their credit evaluated instead of the corporation asking for the funding.

Your Financial Books Become an Asset

When you consider getting assistance through a factoring company, you must be aware that your invoices to your clients become the asset that you will use to get that cash. The accounts receivable financing organization that you collaborate with will purchase these bills from you for a small percentage of what is owed. They will then pursue payment of the debt instead of you. You will have the money that you need before the typical net 30 (or longer) due date which results in accelerated cash flow without placing debt on the books.

The Factoring Company Communicates with Your Customers

Once the invoices leave your business and arrive at the factoring company, they will be the ones to follow up with your customers on what is owed. This can be beneficial for your client because these accounts receivable financing will often extend the length of the payment from 90 to 180 days until it is due. This can also free up your accounting department to work on other tasks since the responsibility to follow up on overdue bills has been transferred to the other organization. Once everything is settled, you will be sent the final amount minus the fee that you are charged for this service.

BMF Advisors offers invoice factoring with a turnaround of 24 hours and no upper limits. Contact our offices today to get started.