How Accounts Receivable Loans Help Keep Your Cashflow Stable

Posted on Posted in Uncategorized

For many small and medium-sized businesses, their ability to function month-to-month often relies directly on their ability to keep payments incoming.  Should a major customer skip their payments, or initiate some sort of dispute over a bill, it can be devastating to their cash flow.  Even the typical 30- or 60-day remittance periods can become a burden should some other problem cause the company to dip into their cash reserves.

Simply put, many SMBs have been put in jeopardy because they had too many invoices in accounts receivable, and too few actually being paid.

One possible solution to this is accounts receivable loans.  Companies offering these loans (also called loan factoring companies) can help ensure your SMB has a consistent cash flow, and eliminate the stress of wondering when your clients will pay their bills.

How Accounts Receivable Loans Keep Your Books Balanced 

The essence of an accounts receivable loan is this:  The loan factoring company takes a look at your receivables and verifies that they’re valid and without any complications such as liens.  Then they pay you up to 80% of the receivable’s value up-front while allowing your company to maintain the relationship with the customer and responsibility for collection. If and when the client pays their bill, you receive the rest of the invoice’s value, minus some service fees.

These accounts can be revolving, rather than case-by-case.  Many customers of loan factoring companies simply turn over all their receivables to their loan factorer on a regular basis.  Further, beyond an initial check of creditworthiness, the matter of loan size limits isn’t an issue – the amount being paid out is solely dependent on the size of your receivables.  As your company and its invoices grow, so too does the amount of money you can get.

This creates an excellent option for smaller businesses who may be challenged to receive credit lines at commercial banks, and who want to avoid the punishing interest rates which often accompany short-term loans.

And as for the service fees paid to the loan factoring companies, many SMBs may even find it to be a cost-savings, compared to handling their own collections.

In short, accounts receivable loans offer you a genuinely stable cashflow – the sort of stability which allows you to focus on growing your business, rather than focusing on collections and other distractions from your core competencies.

Camel Financial wants to help your SMB succeed.  Contact us directly to discuss your accounts receivable needs.

Leave a Reply

Your email address will not be published. Required fields are marked *