Skip to main content

How to use accounts receivables to finance your business?


Inventory financing is a type of asset-based financing where working capital is provided to a company through accounts receivable, inventory, machinery, equipment as a collateral. Accounts receivable financing or factoring use outstanding accounts receivable as a means of financing. Both methods are usually used as a quick access to a working capital, money you use for daily operations. This can be alternative to a bank loan especially if you own a start-up company. There are other financing companies that can offer you factoring services and really help you manage a positive cash flow.

Pledging accounts receivable means that you use your accounts receivable that are not paid yet as a collateral to obtain a loan but you are still responsible for collecting a loan as a business owner. Lender picks accounts receivable they want to accept as a collateral. Accounts receivable that are overdue or ones in which you extended the credit for too long are very likely to be refused by the lender. New invoices are more valuable than the the old ones. I other words the easier is to collect a bill the more valuable it is. Lenders usually loan 70% to 80% value the invoice.

Factoring accounts receivable has more advantages. It means that you sell your unpaid invoices to a factoring company. Company gives you in advance 70% to 90% of total value. After the accounts is paid you will get the rest, minus the small 2-3% fee. One of the biggest advantages is that factoring company takes all the risk so instead of wasting your energy on collecting bills you can focus core of your business. We have already talked about importance of positive cash flow so invoice factoring might be just what you need to maintain it. Don't be hesitant to use especially if it will help you avoid bankruptcy caused by unpaid accounts receivable.

At Emry Capital we are giving you a chance to turn your unpaid invoices to a working capital. We offer you credit lines up to $5 million depending on the strength of your customers and rates as low as 0.25 per week. You can decide which and how many invoices you want to submit. You can apply online with basic documentation and get approval as fast as 24 hours.


Labels

Labels:
Location: West Palm Beach, FL, USA

Comments

Post a Comment

Popular posts from this blog

Credit report and credit score - what you need to know

Credit score is generated by an algorthm using your credit report. Its main purpose is to help lenders to decide whther to approve loan application and determine the terms of that loan. In other words they are determining risk, how likely is that you will repay your loan. Credit report and credit score is not the same but they are connected. There are three major credit report agencies also known as credit bureaus Equifax, Experian and TransUnion that collect information about you and sell it to other companies. Credit reports show what bureaus knowa bout you. They gather information from many sources. Part of their information they get from lenders. Lenders report loans you took to one or all theree agencies. This also means that your credit report might be different in each agency depending where lender reported it. Some lenders don't do reporting so it is important to work with ones that do if you are trying to build your credit. Other part of information comes from publ...
Post a Comment
Read more

Difference between cash flow and profit

You might think that cash flow and profit are the same terms that can be used interchangeably. They are indeed the key aspects of a business but they represent two different financial parameters. Business can have a positive cash flow but no profit or it can have large profit but negative cash flow. How is this possible? Cash flow is exactly what the name says, the way cash flow trough business,its inflow and outflow. Companies use it to meet current and near-term obligations. If company has a negative cash flow in the worst case scenario it can lead it bankruptcy. Positive cash flow means that business can always pay suppliers, meet payroll, purchase inventory, pay taxes and other expenses. Conserving a cash flow is one of the most important features of a good business. It takes time and planning, sometimes even professional assistance. Profit, also called net income is a difference between gross income and expenses. When you subtract your expenditures from your s...
Post a Comment
Read more