HOW ACCOUNTS RECEIVABLE FINANCING HELPS BUSINESSES?
Accounts receivable financing is one form of business loan for securing fast working capital. This pro-business loan uses your company’s accounts receivable as collateral. By selling outstanding invoices at a discount factoring company or AR financing company will be able to provide your business with immediate cash flow.
Similar to a receivable factoring line, the amount funded depends on the gross amount of the receivable, the credit worthiness, age of the specific receivables which are among the main criteria. Naturally, a more current invoice will be easier to process and provide the maximum value. The amount received from an AR financing line will be less than the total value of the invoices that your business assigns as collateral.
The repayment period for invoice factoring or an AR line is generally shorter than for most other loans. Since payments are made as invoices are collected. The loan should be covered once all the invoices have been paid. In the majority of cases, the term for repayment is no more than 90 days.
ADVANTAGES OF AR FINANCING FOR COMPANIES
The benefits for your company to use accounts receivable financing are clear and direct. By outsourcing your invoice management to PMF Bancorp, you can free up collection resources to focus on other more profitable activities like marketing and selling your products. In addition, you can access working capital, enabling your business to overcome the problem of having the majority of your cash tied up in its AR or inventory.
As a direct result, you can focus on growing your business and bringing in more profit. Since AR financing does not require your business plan to be audited like traditional loans , it is a remarkably quick form of immediate cash flow for your company. By being proactive and taking advantage of this type of financing opportunity, you can ensure the growth and even survival in periods of turbulent financial times.
Through this business financing tool, you can obtain working capital effectively and efficiently for young and/or fast growing businesses. At the same time, this financing choice can begin a working relationship with access to a variety of other financial services. PMF Bancorp is a commercial lender that can provide AR financing as well as an array of other financial services that can help take your business to the next level of profitability and productivity. Beyond factoring invoices, these other services that are offered include receivable management & collections, trade financing (i.e. Letters of Credit), equipment financing, and credit insurance to assist your company’s growth.
If your company is considering an accounts receivable loan or other similar service, then feel free to contact PMF Bancorp’s seasoned staff at 800-218-9000 or fill out our Quick application.