Accounts Receivable Financing

New and even healthy businesses can run into trouble when cash flows are uneven, when they cannot find the cash infusion to expand, or have seasonal cash flow fluctuations. There are other ways accounts receivable financing can support your business:

Increased cash flow

• For new purchases and additional business
• To meet your pay roll
• Hire new staff
• Pay your taxes
• Buy capital equipment
• Payoff or pay down outstanding debts

Customer credit services

• To reduce costs associated with bad debts
• Streamline credit approvals for your new customers
• Improve decision-making on new business
• Reduce administrative costs

Accounts receivable management

• Redirect your resources to other critical areas such as marketing or production
• Improve customer relationships
• Improve receivable turns
• Improve accounting

These are just some ways accounts receivable financing, also called accounts receivable factoring, can prove to be a valuable resource to a business owner.
Accounts receivable factoring allows you as a business owner access to working capital based on your credit sales. This financing approach can help even out your cash flow, help with seasonal sales spikes, and allow you to plan in a pro-active manner for your business’s future.
Every business situation is unique. It is important before you enter into factoring services to understand how ACR can:

• Increase your business
• Lower your costs
• Improve your financial picture

Your business is likely eligible for accounts receivable financing if it generates sales on open credit terms to customers with a solid financial base. That’s because accounts receivable financing is determined by the strength of the financial base of the customer buying on credit, and not on your business’s financial condition.

ACR business eligibility checklist:

If you can say “yes” to the following questions, your company may well be able to factor its invoices:

• Do you sell goods or services on Net 30 credit terms?
• Do you work with credit-worthy companies?
• Do you invoice for your goods or services after you have delivered them?
• Do you hold your goods or services outright; that is, the goods or services are not promised to any other party or lender?

ACR invoice eligibility checklist:
If you can say “yes” to the following questions, you may well be able to factor invoices from your business:

• Is your invoice on goods or services that you have delivered to your customer?
• Has your customer agreed to pay that invoice?
• Does your customer have enough credit to pay the invoice?
• Will your customer agree to the factor terms and conditions?

For more information on accounts receivable factoring and your business plans contact an OMJ Commercial Mortgage Specialist. To read more about accounts receivable factoring and the kinds of mortgages that might work for your business venture, check out our blog.