It might seem counter-intuitive, but AR financing for SMEs isn’t just about the money. If one looks deeper, say from the perspective of the small business owner, it’s apparent that this form of financing provides so much more.
Many times, entrepreneurs and small businesses find themselves in need of additional financing. This could be due to problems such as a lack of cash flow, usually the result of large clients sitting on unpaid invoices, inconsistent payments because of seasonality, as well as the monthly pressure of meeting payroll (a fixed expense).
Oftentimes, these problems are not new, and even seasoned companies find themselves in need of extra help. While some businesses try and find funding through traditional avenues such as bank loans or personal savings, it’s not always the right fit. This is because many small business financing systems fail to recognize and support the company as a whole.
AR Financing for SMEs
Accounts receivable financing, or invoice factoring is an alternative form of commercial finance that provides fast working capital to business owners. It uses accounts receivable as a basis for financing, leaving those who use it with a fast and predictable cash flow. Factoring helps entrepreneurs and small business owners smooth out cash flow mismatches, enabling them to focus on their core business without being weighed down by continual short-term funding constraints.
The difference between AR financing and traditional forms of lending is that AR financing goes beyond. Not only does it provide a reliable cash flow through factoring or pledging invoices, it recognizes the successes created by each and every entrepreneur or small business.
No other financing options are related to the strength of the business that the entrepreneur has built. In other words, AR financing puts tremendous value on the customers of the small to middle market business and accords merit to the strength of the business.
Do you still think that AR financing is just about the money?