Accounts Receivable Financing: What You Need to Know

When a company needs a cash infusion, accounts receivable financing is an excellent solution. This type of alternative financing allows businesses of all sizes to access capital secured by outstanding invoices. A company can sell its accounts receivable prior to the actual due date, in exchange for immediate liquidity.

How It Works

Here are a few easy steps to securing accounts receivable financing:

  1. You invoice your customer (account debtor) for product and/or services
  2. You sell the invoice to an accounts receivable company like ExpoCredit (lender)
  3. The lender advances between 80% and 90% of the net invoice amount to you
  4. Your customer pays the lender directly for the invoices
  5. Lender returns the remaining 10-20% minus the applicable factoring fees to you

Should You Seek A/R Financing?

If you are a growing business that needs quick and easy funding, A/R financing can be a very valuable tool. Here are a few examples of companies that should consider A/R Financing:

  • Companies that are growing quickly – You may have an excellent business opportunity but you can’t afford to take it. Or, maybe you want to reinvest in your business and make improvements. Having the cash to capitalize on an opportunity can be invaluable, especially for a small business.
  • Companies with funds tied up in customer invoices – Businesses who want to unlock the cash tied up in unpaid invoices may be interested in seeking A/R financing. Instead of waiting for the customers to pay outstanding invoices, they can gain working capital right away.
  • Companies with limited credit history – Small companies that have a limited credit history may find it challenging to get an affordable, traditional loan. A/R financing provides an opportunity for these companies to unlock needed capital, without the strict requirements imposed by banks.

Do You Qualify for A/R Financing?

It is much easier to qualify for accounts receivable financing than it is to obtain a traditional loan. This is because the creditworthiness of your customers is more important than your own company’s financial qualifications. So companies with a weaker financial history who would not typically qualify for a traditional loan would still qualify for A/R financing.

To learn more about how you can get financing quickly and seamlessly, contact ExpoCredit (https://www.expocredit.com). We look forward to being your financing partner through all stages of your company’s growth.

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