$10,000 to $5,000,000.00
15 -120 day invoice
0.3% - 1.0% per week
As little as 3 – 5 days
It is hard to keep your business running smoothly when the revenue you rely on gets tied up in unpaid invoices. When your clients miss or delay payments, it ties up capital you could otherwise be funneling back into your business. Accounts receivable financing lets you get paid from your invoices without delay, increasing your cash flow without the need to wait.
Accounts receivable financing, also known as invoice financing, can help ease the burden of immediate expenses by increasing your cash flow.
How it Works:
Once you agree to collateralize some of your invoices to obtain a loan, the lender typically advances an estimated 85-90% of the total value of those invoices. The remaining 10-15% is held in reserve and subject to fees until your client pays the invoice off, giving the lender assurance they will make their money back.
Fees incurred on that 10-15% include a factor fee (usually calculated on a weekly basis) which depends on the length of time it takes for your client to pay what they owe. The factor fee is usually around 0.3-1% each week until payment is made.
After the invoices are paid, you receive the remaining 15% (minus whatever amount of fees you owe the lender).
In other words, accounts receivable financing acts as a convenience fee for your business’s working capital.
Things to Keep in Mind:
While paying fees incurred by choosing accounts receivable financing will decrease your total earnings from those particular invoices, accounts receivable financing can cover immediate expenses and keep your business running smoothly whether you are covering payroll, taxes, or other immediate expenses.
Business Loan Networks is proud to help you find the right accounts receivable financing for your needs. Explore our site to get started finding the best way to fund your business or contact us today.