Accounts Receivable Financing

Accounts Receivable Financing and Accounts Receivable Factoring are two terms that are interchangeably used, but there is a major difference between them. Although both refer to the concept of extending cash to an owner of a business in lieu of invoices and other Accounts Receivable, there are differences, no matter how subtle.

Accounts Receivable Financing

Accounts Receivable Financing and Accounts Receivable Factoring are two terms that are interchangeably used, but there is a major difference between them. Although both belong to the concept of distribution of cash to business owners, instead of invoices and other accounts receivable, there are differences, however subtle.

First of all, Accounts Receivable Financing is a loan in which the invoices are used as collateral. But this not the case with Accounts Receivable Factoring. Accounts Receivable Factoring is not a loan. It involves the selling of the invoices to the financing company at a rate less than the face value of the invoices. The financing companies then collect the money at the full face value from the clients. This means the business no longer has the responsibility of collecting the money.

But this is not the case in Accounts Receivable Financing. The process of Financing involves the extension of an advance on the percentage of each invoiceï¿bf½s amount. Also, the responsibility of collecting the money remains with the business house.

Both Account Receivable Funding and Financing companies charge additional fees for services rendered, but in case of Account Receivable Factoring, the fees charged are comparatively higher. This is mainly because the entire responsibility of collecting the money is with the financing company.

Companies providing Account Receivable Financing step in and work with companies who cannot get loans otherwise. Account Receivable Factoring, on the other hand, proves useful to business houses urgently in need of ready cash flow.

This said, both Account Receivable Factoring and Financing prove extremely convenient to companies who urgently require a cash flow to keep their business going.

Accounts Receivable Factoring provides detailed information about accounts receivable factoring, accounts receivable collection, accounts receivable factoring companies, accounts receivable financing and more. Accounts Receivable Factoring is the sister site of Accounts Receivable Collection [http://www.i-AccountsReceivable.com].

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account receivable financing

What is Accounts Receivable Financing?

Cash flow problems often occur at the early stages of business development or during periods of rapid growth. Cash flow especially becomes a problem in industries where it's typical for completed work to go unpaid for 30, 60, or even 90 days after issuing the invoice. Thus, when growing companies start experiencing growth pains, they first try to apply for small business loans.




What is Accounts Receivable Financing?

Cash flow problems often occur at the early stages of business development or during periods of rapid growth. Cash flow especially becomes a problem in industries where it's typical for completed work to go unpaid for 30, 60, or even 90 days after issuing the invoice. Thus, when growing companies start experiencing growth pains, they first try to apply for small business loans.

However, conventional borrowing increases business expenses and normally requires additional collateral. Some companies-especially smaller ones-are turned down by banks because of loan underwriting criteria. Some companies will also explore the option of equity financing, but this form of funding is generally harder to find than debt financing. And once found, it takes longer to arrange.

Accounts receivable factoring, on the other hand, is a viable funding option for companies experiencing cash flow challenges. In fact, factoring is the process of converting accounts receivable into cash in the business, selling unpaid invoices on "Factor" for discounts.

With factoring, instead of depending on the applicant's financial statements, the factoring company focuses on the strength of the client's accounts receivable. In other words, because factoring companies are paid by the applicant's customers (account debtors), factors are most concerned with the creditworthiness of the applicant's customers. If the applicant's company has a product or service that it provides to a creditworthy customer, then the business is a good candidate for invoice factoring.

It's important to note that invoice funding does not create debt or require additional collateral. It is very simple to use. What could take weeks or months to be approved for funding from a more traditional lender, takes 3-5 business days in the world of factoring. Cash advances from 80% of the invoiced amount, depending on the customers and the business volume, can normally be obtained in 24 hours or less on an ongoing basis. In addition, funding occurs as long as a business has outstanding invoices and needs more cash, and as long as the business is selling to credit-worthy account debtors.

Maintaining a healthy cash flow via accounts receivable factoring provides a growing business with the working capital it needs to pay salaries, reduce debt, improve vendor relations and focus on critical success factors-operations, sales and growth.

PRN Funding, LLC, is an extraordinarily focused niche player in the accounts receivable factoring marketplace. Through a process known as factoring, PRN Funding provides business owners with the financial resources needed to grow and effectively compete in the industry. With no minimums or fixed terms, PRN Funding provides healthcare companies with flexible and immediate access to capital. We give you the freedom to factor what you want, when you want, whom you want, for as long as you want. Prior to founding PRN Funding, Mr. Cohen was an executive officer of The MRC Group, a national provider of Medical Transcription Services. Contact Philip Cohen at toll-free 866.776.5407 or visit http://www.prnfunding.com online.

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account receivable financing

Financing Your Business with Accounts Receivable Factoring

Does your business need growth capital? Have you exhausted yor bank financing options? Read this article to learn about accounts receivable factoring.




Financing Your Business with Accounts Receivable Factoring

Obtaining growth capital has always been a major challenge - and stumbling block - for companies. Many business owners feel that the available options from a bank, basically a business loan or a line of credit, are close to impossible to obtain. Furthermore, most business owners have to go through a loan underwriting cumbersome process that takes weeks only to find out if they qualify. And, more often than not, they don't qualify because banks have tough requirements and usually demand that the business owner have spotless credit.

However, if you own a business that is selling services or products to good commercial clients, you have an alternative option. And you won't find it at a bank.

The option is called accounts receivable factoring and it enables you to capitalize on your biggest asset, your invoices from great clients. Factoring provides you with the working capital you need to grow your business and can help you if your biggest challenge is that your customers pay in 30 to 60 days. Factoring provides you with an advance payment, giving you the necessary funds to meet ongoing expenses such as payroll or rent. It eliminates the 60 day wait and gets you paid in as little as 2 days.

As opposed to business loans or lines of credit, accounts receivable factoring is easy to obtain. The biggest requirement is that you do business with clients that are creditworthy and pay reliably. It can work with startups or established companies. Furthermore, accounts receivable financing lines have limits that are tied to your sales. This means that as your sales increase, so does your financing.

Receivables factoring is also fairly easy to use. It works as follows:

1. You deliver goods / services and invoice for them

2. The factoring company buys your invoice and advances you up to 90% (1st installment) of the invoice

3. Once the invoice payment, factoring company rebates lack of funds is still a small part of the costs (second installment)

Receivable financing fees vary based on a number of parameters but can range from 1.5% to 3%, making it a very affordable business financing tool. To qualify for accounts receivable factoring, your company must sell goods / services to commercial or government customers and have profit margins of at least 10%.

Commercial Capital LLC Are you looking for a factoring company? We can provide you with an invoice factoring or accounts receivable factoring quote. Please call (866) 730 1922.

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account receivable financing