AR factoring, also known as invoice factoring or invoice discounting, is the process where a business sells its account receivables (invoices) to a “factor” who will advance cash to the business. Many factoring companies advance anywhere between 70-85% of the invoice balances but FinishLine Capital will factor up to 90% of your accounts receivable.
Invoice factoring fills a much needed cash gap during the selling process. As a business owner, you purchase suppliers or materials that usually require payment almost immediately. You then sell your product or service to your customer who can have up to a 90 day net to pay. In the middle, you are left cash strapped. Enter AR factoring and its many benefits.
Take on additional business
Most of our clients can do more business if they have better cash flow. Some examples are:
- Take advantage of expansion opportunities
- Improving or increasing marketing
- Saying “yes” to bigger customers who demand credit terms
Reduce your expenses
Reduce expenses by outsourcing credit and administration to Finishline Capital,
and by leveraging your healthy cash position.
- Reduce bad debt expenses
- Reduce or eliminate collection and administrative expenses
- Be able to benefit from your suppliers’ early payment or volume discounts
- Be able to eliminate early payment discounts to your customers without financial penalties
- Make it easier for your customers to buy from you by being able to offer extended payment terms without adversely affecting your cash flow
Improve your financial condition
Better cash flow enables some businesses to improve their credit rating.
- Retain all control and equity in your business, and eliminate the need for outside investment
- Improve your balance sheet by increasing cash and decreasing Accounts Receivable
- Get strong financial statements and better credit ratings fast, and position your company for bank financing, SBA loans
- Obtain credit screening and monitoring of your customers