Most companies are able to finance operations and growth by using their own funds or by having the owners make additional capital contributions. Some companies do this by choice – they dislike the idea of getting business financing. Most companies, though, do so because they have no other choice. They just cannot obtain conventional  business financing.

Many companies that run into cash flow problems do so because there is a timing gap between expenses and revenues. Usually expenses are immediate, but revenues are delayed for 30 to 60 days. Revenues are usually delayed because of the common practice of offering net 30 payment terms to clients. This timing gap can affect the availability of funds for other projects or worse, may force the company to delay certain critical payments.

One possible solution is to use a business loan (or line of credit) and use it to cover expenses when available funds are low. However, business loans are usually hard to obtain and can have inflexible limits. Furthermore, the loan application process can require that you provide the institution with substantial documentation and can take a long time to close. Many times, a better solution is to use invoice financing to accelerate your revenues.

Invoice financing  accelerates your revenues by providing your company with an advance for your net 30/60 invoices. This provides the necessary funds to cover operating expenses. The accelerated cash flow strengthens your company’s financial position enabling you to capitalize on new opportunities.

Qualifying for accounts receivable financing is relatively easy  since the main collateral are your invoices, which are backed by the reputation of your clients.  It’s also more flexible than other forms of financing since it’s dynamic and moves in parallel with your billings. This enables your financing to grow, as your company grows. Accounts receivable financing is an ideal solution for companies in the staffing , services, manufacturing and  transportation industries.

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Learn about business financing in Wisconsin and invoice financing in Wyoming.

Most companies that have weathered the recession have been left in a shaky financial position – where that can’t completely capitalize the current economic recovery. For many companies, cash flow has degraded to the point where they are living from client payment to client payment. For example, most commercial invoices used to get paid in 30 days. Now it usually takes  45 to 65 days to get paid. Sometimes even longer.

Although payments seem to take longer to come by, expenses seem to pile on very quickly. You have suppliers to pay. Payroll. Utilities. Office expenses. And the list goes on. This creates a serious gap in your company’s cash flow.  And this gap can prevent your company from growing once the economy improves and sales start increasing.

One way to fix this problem is to ask clients to pay their invoices faster. However, this seldom works as most clients are paying slowly because they have problems of their own. The alternative solution is to get business financing.  Few companies are able to obtain business loans in the current environment though. Institutions are only lending money to companies that have impeccable financial statements,  substantial assets, years of experience and well seasoned management. And even if you meet this criteria,  qualifying for a business loan is far from certain.

A third approach is to fix the cash flow problem using accounts receivable financing. This solution reduces the cash flow gap by financing your invoices, and therefore reducing the amount of time it takes you to receive payments.  The transaction uses a third party financing company referred to as a receivables financing company.

The transaction mechanics are fairly simple. Once you have an invoice from a credit qualified client, you sell it to the financing company, which pays you for it in a few days.  The financing company will buy your accounts receivable in two payments. The first payment is usually for 80% of the invoice. You get the remaining 20%, less a invoice financing  fee, once your client pays the invoice in full.

Qualifying for accounts receivable financing is easier than qualifying for conventional business financing. The most important requirement is that your clients need to have solid commercial credit.

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Learn about invoice financing in South Dakota and business financing in Tennessee.

Securing funding for a new venture has always been a challenge for business owners. Ensuring that the company has the proper level of financing is one of the most critical tasks. However, finding financing for a new venture can be very hard. On one side, you can try and secure venture or angel funding. This type of funding will require that you give up a portion of your equity/ownership in the business. It means you will end up with additional partners – or managers – in your company.

Another route consists of trying to get conventional business financing, such as a business loan. However, few startups can get business loans because most financial institutions require that the company have a track record of successful operations and substantial assets. Since most startups don’t have long track records and have few assets, few can meet these requirements.

Cash flow can even be more problematic for companies that sell to other businesses or to government agencies. This is because they usually have to invoice when they deliver the goods, and then wait 30 to 60 days to get paid. Growing a business while waiting a month or two to get paid can be hard to do. Many times growth is delayed and opportunities are passed. This is an alternative however.

What would happen if you could get your invoices paid in 1 or 2 business days and essentially ran a cash business? Would you still need financing? Would you still turn away opportunities? This can be accomplished by using a neat financial trick – financing your invoices.

Invoice financing enables you to get a substantial portion of your invoices paid immediately, providing you with the funds you need to pay suppliers and employees. More important, you get the funds you need to keep up with your growing orders. If you have a business that is firing on all cylinders, financing accounts receivables can really help fuel your company’s growth.

Financing receivables offers a simple proposition. A finance company, called a receivables financing company, advances you up to 80% of the net value of your invoices. You get the immediate funds while the financing company waits to get paid. Once they get paid, you get the remaining 20%, less the factoring fee.

One of the more important features of financing receivables is that the funding companies biggest criteria (though not the only one) for providing financing is the quality of your clients. This means that if you do business with large credit worthy companies you stand a good chance of qualifying for financing. Furthermore, Invoice financing can be setup quickly. Usually it takes a week or two to set up an account, and after that, funding can be done daily.

Although invoice financing has been around for a long time as an alternative to small business loans, it has been gaining traction and notoriety recently as a solution for growing companies. It offers great flexibility, as your financing is determined by your sales and the quality of your clients. This makes it a great solution for companies whose biggest asset is the clients that they do business with.

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Information about business financing in Oregon and invoice financing in Pennsylvania.

Obtaining growth capital or business financing has always been a major challenge – and stumbling block – for companies. Many business owners feel that the available options from a bank, basically a business loan or a line of credit, are close to impossible to obtain. Furthermore, most business owners have to go through a small business loan underwriting cumbersome process that takes weeks only to find out if they qualify. And, more often than not, they don’t qualify because banks have tough requirements and usually demand that the business owner have spotless credit.

However, if you own a business that is selling services or products to good commercial clients, you have an alternative option. And you won’t find it at a bank.

The option is called accounts receivable financing  and it enables you to capitalize on your biggest asset, your invoices from great clients. Invoice financing provides you with the working capital you need to grow your business and can help you if your biggest challenge is that your customers pay in 30 to 60 days. Factoring provides you with an advance payment, giving you the necessary funds to meet ongoing expenses such as payroll or rent. It eliminates the 60 day wait and gets you paid in as little as 2 days.

As opposed to business loans or lines of credit, accounts receivable factoring is easy to obtain. The biggest requirement is that you do business with clients that are creditworthy and pay reliably. It can work with startups or established companies. Furthermore, accounts receivable financing lines have limits that are tied to your sales. This means that as your sales increase, so does your financing.

Receivables financing is also fairly easy to use. It works as follows:

1. You deliver goods / services and invoice for them
2. The financing company buys your invoice and advances you up to 90% (1^st installment) of the invoice
3. Once the invoice is paid, the financing company rebates the remain funds less a small fee (the 2^nd installment)

Receivable financing fees vary based on a number of parameters but can range from 1.5% to 3%, making it a very affordable business financing tool. To qualify for accounts receivable financing , your company must sell goods / services to commercial or government customers and have profit margins of at least 10%.

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Information on business financing in North Carolina and invoice financing North Dakota.

If you sell goods/services to other businesses or to the government, then you know that commonly you have to wait 30 to 60 days to get paid for your services. Unless your business is well capitalized, waiting to get paid can drain your working capital and affect your business.

Lack of working capital can prevent you from making new sales, forcing you to send customers to your competition. What is worse, if the problem is not corrected, it can affect you ability to pay employees or suppliers. Missing payroll and supplier payments is a sure indication that a business is in serious financial troubles. The solution to this problem is, of course, simple. You just need to get business financing.

Obtaining business financing (such as a line of credit or business loan) is easier said than done. If you go to a bank, they will require that you provide them with three years audited financials and a solid business plan. That kills any chances of financing for most startups and new businesses. There is, however, an alternative form of financing that can help you get working capital.  And, it almost always works better than a business loan. It is called invoice financing.

Invoice financing provides your business with a substantial advance on your slow paying invoices – sometimes up to 85% of what you have invoiced. You can use the advance as working capital to cover new sales orders, payroll or supplier payments. Factoring receivables provides you with relief form slow payments and provides you with the working capital you need to grow.

Financing receivables is simple to use and works as follows:

1. You provide the product/service to your client and send an invoice to them
2. You send a copy of the invoice to the financing company
3. The financing company advances you up to 85%. This is your first installment
4. Once your client pays, the remaining 15% (second installment) is advanced, less a small service fee

The fee you pay will be based on the sales volume that you finance and the credit quality of your clients. Fees can generally range from 1.5% to 3.5% per month.

On of the big advantages of financing receivables is that it is easy to obtain than a small business loan and can be set up in a few days. Most new and established businesses can qualify easily. The biggest requirement to qualify is that you must do business with reputable clients or government entities.

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Information on business financing in New Mexico and invoice financing in New York.