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Small & medium-sized businesses often struggle with cash flow. Extending credit to customers is not a choice at times, and this can impact the working capital needs. Instead of struggling with traditional loans, your company can consider the option of AR financing. Short for accounts receivable financing, AR financing allows companies to get working capital when in need, by using their bills/accounts receivables that are due. Services like Accord Financial invoice factoring have been working with small businesses for the longest time, offering them the financial flexibility that they need. Here’s more on what you need to know about AR financing.
When to consider AR financing?
There are several reasons why a small business may opt for accounts receivable financing, but ideally, your company should consider this option, if –
- Traditional bank loans and financing options are not available
- Funds are needed immediately without delay
- There is a shortage of working capital
- There is an unexpected increase in seasonal demand
- Cash flow concerns cannot be resolved otherwise.
Things worth knowing
If you have sold goods/services 30 days more than a standard AR cycle, you can consider the choice of accounts receivable financing. Yes, you will pay a fee to the factoring company, but that fee is absolutely worthy when you need money and don’t have the time to wait for a conventional lender. Finding a factoring company is another thing to consider. You have to ensure that you work with a service that can offer custom solutions for your accounts receivable financing needs, and they must have some experience of working with services and businesses with a similar profile as yours. They should also follow a transparent policy for the entire process, and in the long run, this form of financing shouldn’t become a burden on your business.
Taking the call
In case you are considering the option of accounts receivable financing, we would strongly suggest that you check the fee involved, and if the entire process makes sense for your immediate financial needs. Also, it should remain one of the flexible lending options for your business. In other words, do not take the management of cash and working capital for granted, just because you have the choice of accounts receivable financing.
Used for the right reasons and at the right time, this could be the perfect solution for managing cash flow needs. Check online for factoring companies now to go ahead with accounts receivable financing.
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