Over the past few years, accounts receivable financing has exploded in popularity with small business to middle market company owners looking for an alternative form of financing. Unlike traditional channels, AR financing provides numerous benefits—without the risk.
This level of trust and comfort is one of the main reasons why small business owners have fallen in love with accounts receivable financing, here are the rest.
As a small business owner, what is most precious to you?
Did you say, “time”?
According to Forbes, most companies spend the majority of their time focused on financing and accounting. This means that many business owners are constantly stuck spending countless hours dealing with financial tasks, such as paying bills and collecting unpaid invoices every month.
Luckily, Accounts receivable financing has the ability to save a company time and effort that would otherwise be spent on collecting unpaid invoices from customers. This is because most factoring arrangements include this service.
This allows business owners to spend less time managing cash flow, freeing up time to focus on more productive and lucrative aspects of the business—such as selling, business management, and customer service.
Another benefit of AR Financing is that as a company, you get complete focus from your factoring company. As you try to juggle all of the demands of owning a business, those in charge of your receivables have only one concern— getting your money into your hands.
Some studies have shown that if an account becomes 90 days overdue, your company may receive only 73 cents on every dollar owed. After 6 months of delinquency, that number drops to only 50 cents.
Most companies do not have the time and resources to chase down these delinquent payers, but your factoring company will. Outsourcing accounts receivable by employing an invoice factoring company is an effective, cost-efficient method of small to mid-sized business financing. It allows companies to focus on their main business objectives while getting more out of their accounts receivable with fewer staff using fewer resources in fewer hours.
The end result is a healthier bottom line and a more focused, streamlined accounts receivable financing process.