How Can AR Financing Help Your Growing Company?

Small business owners have to be mindful about pursuing growth opportunities in a way that will be sustainable. Taking on a big financial obligation could send your business sideways if your initiatives don’t yield the increase in revenue that you were hoping for. Leveraging accounts receivables as collateral for a loan or assigning your interest in them to a factoring company could spare you common challenges that businesses run into with other financing options.

Get Capital Now

One of the biggest draws of AR financing is that it gives you access to the revenue that you’ve already generated but just can’t access. Rather than waiting for your customers to pay you and having to doggedly go after outstanding invoices, you can reap the proceeds of a quick sale. If you have a time-sensitive need for more liquid capital, selling receivables is probably going to be a much faster route than traditional small business lending programs.

Protect Your Business Credit Score

Assigning invoices to a third party doesn’t require you to take out a new line of credit. You won’t have to worry about any potential impact on your business credit score in applying for financing or making your ongoing payments. Once you have the money from a transaction, you don’t have to worry about paying it back. This supports your effort to establish and sustain a formidable credit score, which may be integral to your company’s ability to achieve growth.

Keep Interest Payments out of Your Operating Expenses

When small business owners take out a loan or rack up big balances on a credit card, paying off the balance isn’t always a big problem. In many instances, it’s the interest rate attached to the balances that are the real budget killer.

AR financing transactions with factoring companies facilitate fast infusions of capital without subjecting you to exorbitant interest charges. If you don’t sell your receivables, collateralizing them in loan agreements may also help to hamper high-interest rates. Receivables are an appealing choice of collateral to lenders and businesses alike, so harnessing their value in loan agreements could enable you to qualify for better terms.

Ultimately, AR financing could save you from several problems that could be disastrous for your development goals. This financing option could help you pay for your ongoing expenses and fund growth-oriented investments in your company, so taking your business to new heights won’t have to involve growing pains.