Top 5 FAQs about Invoice Accounts Receivable Financing – December 18, 2018
Accounts receivable financing (or invoice factoring) is a quick way for businesses to meet immediate cash needs.
It can be a valuable tool to gain working capital without incurring debt, particularly for new and growing companies. By financing your accounts receivable, you can immediately receive cash needed to meet payroll, pay bills, take on new opportunities and grow your business.Receivables factoring is nothing new, but it may be a new concept to you. Here are the top five most frequently asked questions about accounts receivable financing.
1. How does accounts receivable financing work? It’s simple. You submit your invoices to Allied and get paid quickly — typically the same day — giving you quick access to the cash needed to run your business. Allied will fund the majority of your invoices immediately, with the remainder, minus a small percentage fee, once your customer pays, which can be 30, 60 or 90 days later, depending on your terms offered.
2. How is accounts receivable financing different from a bank loan? Rather than focusing on your creditworthiness, we look at the credit of your customers. Receivable financing is not a loan, so you won’t incur any debt by financing your accounts receivable. Most importantly, obtaining a traditional bank line of credit may take weeks for approval, whereas Allied makes quick decisions to get you the funding you need, sometimes in less than a week.
3. Do I have to finance all of my invoices? No. You have the freedom to choose which invoices to finance with us. And we do not require that all of your customers make payment to Allied if you chose not to finance that customer.
4. How much does accounts receivable financing cost? The cost of financing depends on your sales volume, the creditworthiness of your customers and the industry in which you operate. Chances are, accounts receivable financing costs less than the discounts you offer your customers who pay their invoices promptly. Also, as a division of Axiom Bank, N.A., we are able to offer competitively priced financing for your business.
5. What will my customers think? Most of your customers are more than likely sending their payments to asset-based lenders already. We can even let you know if that is the case since we have over 25 years of history and work across many industry segments. Plus, our communications with your customers are intentionally designed to protect your reputation. We partner with you throughout the process and understand the importance of client relationships. If you choose to finance your invoices, the notice letter will be sent to the accounts payable clerk, and in most cases, your contact who issues purchase orders and contacts will never think anything about it.Choosing to finance your invoices can give you the cash flow needed to not only run but grow your business. Do you have more questions about accounts receivable financing or how to get started with Allied Funding? Give us a call today to learn more.