Every once in a while, businesses face the uncomfortable situation where bankruptcy seems like the only option left. Many times, businesses find themselves headed toward bankruptcy even if sales are good. Between existing debt, payroll, and regular operational expenses, revenue may not be coming in fast enough to cover costs. In these situations, accounts receivable financing can really save the day.
An introduction to accounts receivable financing
For businesses in dire straits, accounts receivable financing is a means of monetizing open invoices for immediate working capital. The initial agreement take only 48 to 72 hours to arrange, and invoices can be submitted and converted into cash within 24 hours thereafter. Invoices can be submitted as they are generated or in large batches to catch up on accounting and get the working capital your business is owed to pay off creditors, vendors, meet payroll, and take care of regular business expenses. In short, accounts receivable financing is a fast, efficient, and debt-free alternative to bankruptcy, that allows your business to get back on track.
Unlike traditional bank loans, accounts receivable financing does not place debt on the balance sheets. Instead, it is considered a simple sale on receivables, designed to get businesses the money they are owed (less a small administrative fee). As a matter of fact, many business owners initially use accounts receivable financing to avoid bankruptcy, and then continue to monetize open invoices as a means to stay on top of accounting, expedite payments, and focus resources on running the business successfully. This is a much better alternative than getting caught in the uncomfortable position of chasing down payments from open customer accounts while simultaneously struggling to keep all expenses covered.
With accounts receivable financing, the burden of chasing after every cent owed to your company is removed once invoices are submitted. One open customer invoices are submitted for cash, the responsibility of getting payment from customers falls to the entity providing the financing. Additionally, by monetizing invoices with this service, all revenue will be coming in from a centralized source. This gives your business a steady and healthy cash flow, and can remove any strain from your company’s cash flow.
If your business is having trouble meeting payroll, and vendors are calling regularly with “friendly reminders” about outstanding balances, accounts receivable financing can offer a fast and efficient solution to help steer your business away from bankruptcy.