Accounts Receivable Financing: The Way to Increasing Profits explores how to increase a business’ profits by using accounts receivable financing.

Many businesses that fail are profitable when they go under. Costs of sales, carrying inventory and rapid growth can absorb your business’ cash flow. And waiting 60 to 90 days to get your invoices paid can slow your sales and business growth. All business’ have to pay rent, suppliers and meet payroll on a regular basis. If most of your cash is tied up in slow paying invoices you may miss important opportunities to grow your sales. Can you, as a business owner, deliver large orders to new clients and provide credit to your customer’s for 60-90 days?

If you cannot afford to wait to get paid by your clients there is a solution that can provide you with the necessary cash. It’s called accounts receivable financing. With accounts receivable financing you can accelerate the payment for your invoices, get funding for exponential growth, and meet your recurring obligations.

If adequate bank financing is not available, accounts receivable financing may be the solution to find your way to increasing profits. The main requirement is that you have invoices from creditworthy commercial customers. Many factoring companies are comfortable working with your new company – even if you have no hard collateral – provided that you have good invoices, a strong gross margin and a solid business plan.

Accounts receivable financings involve the sale of a business' book debts on a continuing basis. Usually, the commercial finance firm will buy the business' sales invoices at a discount of between 70 and 90 percent. The commercial finance company then collects the invoice amounts from the business' customers. Your business receives the cash, less the agreed upon fees, from a credit sale quickly (usually within 24 to 48 hours) and maintains a healthy cash-flow even though your customers may not pay for the sale for another 60 days or so.

Usually, the commercial finance firm takes a percentage as profit when the accounts receivable are paid; however some companies prefer to provide a percentage up front, the remainder on collection, and charge interest and fees on the transaction.

Another advantage of accounts receivable financing is that it is like a line of credit that increases as your business grows. There are commercial finance companies that provide accounts receivable financing for small, medium and large businesses. And your financing costs can be reduced as your business grows. As a tool, accounts receivable financing allows you to tap into the power of your greatest assets – the credit of your credit-worthy customers and their obligation to pay for goods and services you have sold to them. It allows you to take advantage of new opportunities and grow exponentially.

Copyright 2007 Gregg Financial Services

www.greggfinancialservices.com