Accounts receivable financing has become popular in small businesses because it leverages your outstanding invoices for immediate payment. Although the amount you receive is lower than your full invoice, you have instant access to the money in cash. These are the benefits of this type of financing.

You Maintain Ownership of Your Company

If you own a startup, want to expand your company, or have just had a difficult sales season, you may consider working with investors, such as venture capitalists. Unfortunately, venture capitalists require significant ownership of your company before they will invest. This means that any decision you make, even growth decisions, must be agreed upon by your venture capitalist partners.

Rather than sell part of your ownership in your company, you can take advantage of your current assets by leveraging them for cash. Your possible greatest asset is your accounts receivable. If you have enough receivables to overcome your deficits, you can maintain ownership of your company.

Fast Cash

If you have accounts receivable, you know that sometimes your clients are late with their payments. You may also encounter unexpected expenses. In these cases, you can pursue accounts receivable financing. Depending on the institution you are working with, you will receive part or all of your invoice value in cash immediately. You don’t have to keep hassling your customers to pay their invoices immediately because you have access to those funds right away. This will keep your customers happy and allow you to cover your expenses.

Great for Small Businesses

Getting a loan can be challenging. You must come up with collateral or have an exceptional credit score, or more. Some lenders even have a minimum you must borrow. In addition, these loans can take weeks or months to complete. However, if you have unexpected expenses, you may need the money right away, and if you own a startup company, you may not have accumulated enough assets to provide collateral.

Funding through your accounts receivable is unsecured, so you don’t have to provide collateral. In addition, your approval may occur in mere hours or within a few days.

Focus on Your Business

Many small businesses don’t have extensive accounting and collections departments. Therefore, pursuing accounts receivable can be a challenge. It takes your employees’ time away from your core business. In addition, invoices that aren’t paid right away typically have lower returns. However, when you finance through your accounts receivable, you turn your collections over to another company and can return your focus to your business.

Accounts receivable financing is a strong option for small or new businesses. You keep your company, get your money quickly, have more favorable terms than loans and you can refocus on what makes your company money.