Receivables Financing: An Effective Emergency Funding Option

In business, money matters. These financial resources are essential for a number of things. You need it to purchase raw materials, to pay for employee salaries and wages, to pay the lease and all other operational as well as general and administrative expenses.  Additionally, funds are needed to provide for expansion and other corporate ventures. Add in to the pile emergency and contingency cases which make it imperative for businesses to always plan the management and use of this limited resource. But when worse comes to worst and an emergency pops out, where can entrepreneurs get their needed funds? The answer is through receivables financing.

receivables-financing-ukRemember that even if sales mean profit, they do not always mean cash. Customers and clients do their purchase either through cash or through credit and in many cases, the latter prevails. The problem with this though is that even if customers do pay, the money is not always readily available for use should the entity need it. It will take time before it will be actually realized and held by the business.

The only way to hasten up the collection process is through funding your expenses or deriving cash from the unpaid receivables or so called customer invoices. This is achieved through receivables financing.

What happens in this type of funding method is that entities get to receive majority of the value of the receivables in advance before customers actually pay in full. Oftentimes, financial providers will give about eighty to ninety five percent of the receivables’ value with the balance less agreed upon fees only to be forwarded after full collection has been received from the owing customers. To put it simply, it’s like selling off your customer invoices to an institution, receiving the amount equal to its value and then going on with business as usual.

Another good thing about using receivables financing especially during emergency cases is the fact that they are very quick to process. In as fast as twenty four hours, the fund can be provided already. Additionally, even struggling and losing companies can make us of it as receivables finance providers do not bank on the financial status of the businesses seeking it but rather on its owing customers. No financial reports will even have to be submitted for perusal and one’s credit history and grade will have no impact on the application.

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