by Shane Adair, Marketing Manager
The speed with which individual companies, entire industries and the global economy do business has steadily increased for some time. Innovations ranging from the industrial revolution to the arrival of the digital age created a present where organizations can easily function on a 24/7/365 basis, no matter what they do or where they’re located.
While the current business climate offers a number of advantages in terms of access, turnaround time and general speed of operation, it presents a significant problem for companies following a traditional 30-, 60- or 90-day cycle for collecting on unpaid invoices. Even though you may be expected to produce, package, ship and deliver a product in just a few days, your accounts receivable department won’t collect on the bill for weeks or even months afterward.
The value of A/R financing in an always moving economy
Waiting for payment on an invoice while continuing to produce goods or provide services can quickly lead to cash flow problems for companies, and those issues only become more complicated as unexpected expenses or opportunities for improving operations arise. Whether it’s a need to purchase more raw materials, the chance to acquire new equipment at an attractive price or a major repair, the inability to keep pace with client transactions is a major concern across the business world.
Accounts receivable financing is tailor made to address such issues, as it bridges the gap between providing something of value to a client and receiving payment. Significantly different from a traditional bank loan, A/R financing draws on your existing unpaid invoices as collateral for a revolving line of credit. What does that mean for your business?
- You don’t have to worry about finding collateral or determining if you can afford to lose it in a worst-case scenario – the money already owed to you is all you need to secure the loan and set up your line of credit.
- You can keep your A/R financing going for as long as you need to. Instead of a lump sum loan, you can pass along new invoices to increase your credit and continue using the funds to effectively manage your business without encountering a cash flow crunch.
- The funds are flexible and can go toward nearly any business purpose. Whether you need a little extra cash to make sure payroll is set or to purchase new equipment and pay for employee training, A/R financing makes sure you don’t have to wait for your clients to pay before taking action.
The time it takes to receive payment for work already completed is unfortunately a foe of many businesses across the globe. When you tap into A/R financing as an effective funding option, you successfully and efficiently tackle a problem that continues to trouble many other organizations. To learn more, get in touch with TAB Bank today.
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