Getting loans for businesses has become increasingly difficult in recent times, and it is anticipated to be even harder to get in the days to come. The volatile economy, slumping profit margins and a stiff credit market are making loans scarcer than before. Specifically, if you are a small business owner, you must be realizing how banks are showing indifference while approving loan requests. The latest Federal Reserve Policies are affecting the banks’ lending decisions, and giving out loans to small businesses is not profitable for the banks anymore. Due to this reason, these businesses are likely to bear an additional cash burden due to less availability of loans or lines of credit. To resolve this situation immediately, you can turn to the most viable option called accounts receivable factoring, through which you can easily meet the short term business obligations.
You need to keep in mind that the devaluation of currency, as well as vulnerability in the stock and credit markets will get worse, resulting in tighter credit standards, and non-availability of traditional loans. On the other hand, your customers may be asking for credit extensions beyond the usual 15, 30, 45 or 60 days credit terms. If you agree to their request, it will further delay payments against the invoices. In the interim, small business owners like you have to look for a steady funding option for a constant cash flow without taking on further debt. A/R factoring or invoice discounting can provide your business a much needed source of cash flow for regular business expenses or implementing an expansion plan.
A/R Financing is a great option for business owners to improve cash flow by financing their invoices less a discount fee. You can receive cash in advance of up to 90% of the invoice value that is due from your customers, and meet operational overhead. At a glance, you can get the following benefits from having this instant cash flow:
•Fulfill your working capital needs.
•Meet payroll expenses.
•Extend further credit to your customers.
•Fuel business growth by hiring new staff or implementing new business strategies.
•Clear tax burdens.
Considering the current stalemate in the lending market, you can’t actually rely on banks for financing. A/R factoring can boost working capital reserves to help your business grow continuously without facing any roadblocks. For invoice factoring, you don’t need to have a spotless credit history. Factoring companies approve funds on the basis of your customers’ creditworthiness, not on your business’ or personal credit. If you are still struggling to obtain the conventional forms of financing, then opt for factoring services and see how it can turn things around for you.