Not having the ability to use money that is promised to you can be frustrating. Accounts Receivable Financing, also called “factoring,” can deliver the money that is owed to you ahead of time, allowing your business to focus on other important things. Factoring companies, like Prime Resource Capital buy the accounts receivable and deliver the funds to you early, in return for a percentage of the balance. Once the initial fees are extracted from the balance, the customers make their payments to the buyer.
One of the things that factoring can free up is time. Instead of spending weeks or months collecting money from customers who have not paid, your business can focus on growth. The factoring firm will deal with collections, and your company can use your resources to increase sales and productivity instead. Accounts receivable financing allows your organization to use the extra time and money to make your business a strong and stable firm. Another way that accounts receivable financing saves companies time is by preventing that company from having to apply for loans that can take weeks or even months to process.
Since your customers are responsible for repaying the majority of loan, credit checks are usually not required. There is no need to risk losing your house or other valuable items, because the collateral has already been taken care of by your receivables. If your customer base is trustworthy and your accounts receivable are less than 30 days old, your factoring rates will be lower. Your fees are based on the ability of your customers to pay, not on credit history or current assets.
Accounts receivable financing is common way to relieve businesses from financial stress quickly. The quicker your customers can deliver payments, the lower your fees will be. If you find that your expenses are increasing rapidly or that you need more capital to invest in business opportunities, factoring can be a great way to increase cash flow and get your company back on track.