How AR Funding Benefits Small Businesses
There are dozens of bills that your company has to pay every month so you can stay in business. You have to pay utilities in order to operate your equipment, rent in order to have facilities, wages in order to have a staff and on and on and on. This is something you accept as a business owner, and unfortunately it’s something you have to accept whether or not your customers are paying off their balances. When it comes to steady cash flow, AR funding is the best option for small businesses that have to wait on payments but still have to cover their costs.
Pass on Collections
Collections can be a touchy subject for small business owners who don’t want to pester and potentially lose a client. Fortunately, selling your accounts to a factoring company takes the responsibility of collecting off your plate. Not only that, but you get paid before your client has parted with their money. As long as you can prove to the factor that your clients are creditworthy, you’ll be paid upfront and the wait will be over. The company that buys the account from you will keep a small percentage as their fee, which is a reasonable price to pay for keeping your business afloat.
Streamline Your Financing
All too often, small businesses cover income gaps with borrowed money. This is a short-term solution that can lead to long-term problems. AR funding provides money without the burden of interest and repayment since it’s cash that you’ve already earned. Once you’re established with the factoring company, there’s no processing time and no interest fees. Selling your invoices will help regulate your monthly income without forcing you to do anything other than run your business as you see fit.
Timely payments are especially important for small companies. Without reliable income, it’s nearly impossible to put aside growth capital. Instead of taking on the liability of debt, business owners can sell their receivables without any strings attached. By limiting the time you spend waiting on payments, you’ll increase the time spent allocating your funds and potentially growing your business. There’s no sense in putting everything on hold because some customers take too long to make payments.
As a small business owner, you have countless jobs and endless work to get done. While you’re welcome to include collections among your tasks, you’ll probably be better served turning to AR funding so that you can put your attention toward running and expanding your business.