Accounts receivable financing is a funding alternative which many small business owners turn to because they are unable to receive loans from traditional banks and other lending institutions. It’s a fairly well-known fact that less than half of all applications for loans are eventually approved by banks, so there is a considerable need for various forms of alternative lending like Accounts Receivable financing. Here are three ways that this kind of funding can be highly beneficial for your small business.
No collateral needed
Since accounts receivable financing does not involve a loan of any kind, there is no need for you to put up collateral as a means of protecting the lender against default. Instead, a lump sum is delivered to you in exchange for some or all of your company invoices for a given month, and that lump sum will be an amount equal to between 70% and 90% of the invoices’ face value. This can be very advantageous for your small business, because none of your assets are ever jeopardized, nor is there ever any monthly payment to make on a loan.
Retention of ownership
In the same way that no collateral is required by Accounts Receivable financing, neither does any other party acquire ownership interest in your company. Because the nature of Accounts Receivable financing calls for your company invoices to serve as the surety for an alternative lender, there is never a need to involve collateral, or any percentage of company ownership in exchange for the lump sum cash advance.
Smaller receivables staff
If your small business regularly engages in accounts receivable financing, it won’t be necessary to maintain a large receivables staff for collecting amounts due on invoices. Once a factoring company purchases your invoices, it becomes the responsibility of that factoring company to collect amounts due. Your skilled company personnel can be working on value-added activities within the company, rather than chasing down customers for invoice payments.
Invoice factoring with Vankeith Commercial Capital
If your small business needs immediate cash to cover a cash flow gap, or to spur business growth, you should contact Vankeith Commercial Capital. We will be glad to discuss alternatives for supplying the funding needed by your company to keep the business running as smoothly as possible.