Sometimes, small business owners need a loan for their business but aren’t eligible for traditional financing. Accounts receivable financing has been a business practice for many years and is still a viable form of small business funding today. Factoring is another name used for accounts receivable financing. It works when a lender or factor advances money to a business based on the number of invoices that have yet to be paid. 

Get Cash Fast

One of the best benefits of accounts receivable financing is how fast you can receive money. Because it isn’t the same as a traditional loan, there isn’t a long approval process involved. Applicants don’t have to go through the same rigorous credit checks that come with conventional financing. The other benefit to accounts receivable financing is you don’t have to put up any of your valuable possessions as collateral to get money.

Relieve Some Stress

As long as your business has been fairly successful in the last year or so, you shouldn’t have to jump through any hoops to acquire accounts receivable financing. If you’re already stressed out from being short on cash, then you will probably find peace of mind by factoring in your invoices. Perhaps you missed a few credit card payments in the past few years or had an overdraft in your bank account. Normally, these would be issues an applicant would face if they were applying for conventional financing. The factor will check credit history, but they’re more concerned about the history of the company that owes you money on the invoice. If the companies have good credit history and make on-time payments, this will appear favorable to the lender. 

Find the Right Financing

There are a few different types of accounts receivable financing. Your lender will look at your specific situation and your needs to determine the right terms. The most common kind of accounts receivable lending is factoring. Factors give cash quickly to applicants for selling their accounts receivable and invoices. Inventory lending is a form of financing that gives a business owner a line of credit based on the assets they have in their inventory. This is also known as asset-based lending.

If you haven’t already explored your options with accounts receivable financing, then there’s no better time than the present. Freeing up cash can allow your business to realize opportunities and grow as a result. Ask your lender if factoring can work for you.