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 is paid, the factoring company rebates the remain funds less a small fee (the 2nd 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.
