3 Ways Accounts Receivable Financing Can Improve Cash Flow

Running a company is quite the balancing act. You need to please customers, pay employees and manage the many overhead costs that always seem to keep piling up. In a perfect world, satisfied customers would pay their bills on time, allowing you to keep your employees happy and pay cover all your business expenses with money to spare. Unfortunately, the world of commerce is not perfect and that’s why accounts receivable loans exist. While borrowing money isn’t always a great choice for business owners, here are three reasons why accounts receivable financing is the right way for your company to maintain cash flow and improve operations.

1. Timely Payments

In order to cover all of your monthly costs, you need to always have a certain amount of money available. Because clients often take a long time to process payments, it’s easy to be left in the financial lurch even when you’re steadily meeting the needs and demands of your clients. You can’t very well expect your utility company or one of your suppliers to continue providing services when you aren’t able to pay them on time. Steady business operations require steady cash flow, and that can only be achieved when you stop waiting on payments.

With accounts receivable loans, the long wait time is eliminated. Using the money you’re owed for services rendered as a guarantee, you can have a financing company advance you the funds and then reimburse that lender as soon as your clients settle their balances. In exchange for a small fee paid to the lending company, you’re able to keep your business running without watching your cash flow dry up.

2. Reasonable Collateral

Securing a loan with collateral can be a risky business, especially when entrepreneurs have to put their personal assets on the table. Accounts receivable funding is secured by money that your company is due from a creditworthy customer. You don’t have to worry about putting important holdings on the line and you know that the terms will work for your company because the terms are based around your receivables. This form of lending is very beneficial for both the borrower and the lender, making it the ideal practice for your company.

3. Good for Business

Improving your cash flow will allow you to continue serving your clients to the best of your ability. If unpaid invoices leave you short on capital, the services you provide will be compromised and you may end up losing business. Accounts receivable loans are designed to keep you focused on doing your work and generating more revenue instead of constantly worrying about money and spending time dealing with collections. With money issues eliminated and more time freed to work with clients, your business will be poised to grow and succeed.

If your office is constantly busy and yet you feel like you don’t have the funds to show for it, you have a cash flow problem that needs fixing. Accounts receivable loans are the right way to access the capital you need without causing further financial strain for your business.