FAQ About Accounts Receivable Financing Services

Many potential clients wonder how they can use a firm's accounts receivable financing services to improve their business's performance. As a result, please read these answers to frequently asked questions about accounts receivable to get a better understanding of the opportunities and see if it is right for your business.

"What is accounts receivable financing?" 

This service is a type of financial arrangement that allows business owners to exchange their future invoice payments, or "receivables," for a cash advance that can be used immediately for their business's needs. 

"What are the benefits of hiring a firm to use this financing option?" 

There are many advantages to using a firms financing services. For example, many firms can help you reduce the time spent waiting for customers to make payments on invoices by offering cash upfront for short-term invoices. Moreover, many firms offer clients a simple application process that takes the guesswork out of applying for financing services. 

Firms also help clients reduce the amount of time they spend on collecting overdue accounts by offering collection services that can help you resolve problematic accounts efficiently. Many clients enjoy using this service because it helps them free up resources for their business's other needs. 

"What types of receivables are often accepted?"

Often clients are able to exchange future payments for invoices that are due within 30, 45, or 60 days for a cash advance. Most firms accept these types of invoices because they provide clients the most benefits.

"What is a factor discount?" 

A factor discount is the amount that is charged for providing you cash upfront for your future invoice payment. As a result, you can think of this expense as the cost of doing business with a firm. 

"What are the key factors a firm uses to determine how much I money I receive?" 

The most important factors used to determine your payment include your customers' credit history and the types of invoices you wish to trade for a cash advance. Firms use these factors to determine your payment because they provide a good idea of the probability that your invoices will be paid on time. Knowing this information is crucial because it helps the lender decide how much they can afford to offer you for your invoice payments. As a result, it is typically required for clients to provide as much information about their customers' payment history as possible to ensure a fair offer for their future invoice payments. 

"How many accounts receivable can I trade in for cash upfront?" 

Many firms allow clients to trade in as many accounts as they wish for a cash advance which provides flexibility as it allows you to customize the services to fit your needs. 

The above frequently asked questions and answers are intended to provide some insight into accounts receivable financing and to help determine if it is right for your business. For accurate information and customized services contact a frim near you.