Make the most of A/R financing

Make the most of A/R financing

Make the most of A/R financing

by Curtis Sutherland, VP Accounts Receivable

Accounts receivable financing is a powerful, flexible tool that gives businesses near-immediate working capital in exchange for unpaid invoices. Companies enjoy the ability to increase funding by exchanging a reliable asset at their own discretion, the relationships they build with experienced, knowledgeable providers and using unpaid invoices as collateral. However, no form of loan or funding can be effective without strong plans for how to use the money and recognizing potential pitfalls that can come with a lack of focus and direction. Use these tips to make the most of your A/R financing.

Know where your A/R financing will go

A/R financing bridges the gap between the time you issue an invoice and receive payment, which can be a major pain point in industries where tradition dictates waiting periods of as long as 90 days. Businesses that seek A/R financing generally have a need for more immediate funding and recognize the problems a short-term lack of working capital can bring. However, it’s always best to be as detailed as possible. A general awareness that money is tight or a major expense is approaching – be it a need for new equipment or a continuing requirement like payroll – isn’t always enough.

As you prepare to seek A/R financing for your business, gather as much financial information as possible to better understand pressing needs as well as possible improvements that can come with an influx of working capital. Taking this action means providing more complete and accurate information to potential partners, which can make the process quicker and smoother, as well as having a plan in mind before your organization receives its A/R financing. Make sure your budget is current and have discussions about immediate and future needs during the beginning of this process.

Set aside some funding for emergencies

A lack of immediately available funding means all of a company’s available cash goes toward paying bills, keeping the lights on and the production line staffed. This leaves companies in a precarious position as far as handling unforeseen and unpredictable emergencies. A/R financing offers a reliable method for eliminating this constraint, but it also means an organizational shift in viewing available capital.

Having funds set aside for an emergency is a responsible method of addressing issues that can’t be specifically predicted or prepared for. While this solution is often out of the reach of businesses caught in a cycle of waiting for invoices to be paid, A/R financing gives organizations the power to make better long-term financial decisions. Use the advantages of A/R financing to develop or strengthen your emergency fund and increase peace of mind for company leaders.

Opportunities and obligations

A/R financing often enters the conversation when businesses have financial difficulties or anticipate them due to cash flow disruptions related to unpaid invoices. This isn’t the only motivation companies should have for finding a financial institution to partner with and begin the process. An attractive opportunity is just as important of a reason to seek out A/R financing and receive a fast influx of funding.

While specific opportunities for change, growth and development differ tremendously from industry to industry and even between organizations in the same market, the positive results that stem from taking advantage of them are universal. Whether there’s a chance to purchase new, more efficient equipment at a discount or a lucrative contract available that requires an organization to bring on specific contractors or assets before making a bid, A/R financing is here to help. When organizational leaders have crunched the numbers and determined an opportunity makes sense for the enterprise, the last thing that should hold back action is the delay between issuing an invoice and receiving payment.

Finding the right partner for an A/R financing agreement is a critical part of making the decision a success. To learn more about the power of A/R financing, get in touch with TAB Bank today.

The post Make the most of A/R financing appeared first on TAB Bank.


About the Author

Curtis Sutherland

Curtis is an accomplished banking executive with over 15 years of commercial banking experience with a focus in structured finance. Areas of expertise include factoring, asset based lending, equipment loans, inventory lending, commercial treasury services, and the uniform commercial code (UCC). History of excelling in a fast-paced growth environment, managing organization change, and attaining superior customer service levels. Ability to leverage technology and human capital to facilitate business excellence and competitive advantage. Experienced in cultivating and maintaining key relationships with clients, executives, shareholders, and strategic partners. <br><br>Curtis has gained invaluable experience while successfully managing a rapidly expanding portfolio through organic growth and company acquisitions. Offer comprehensive credit discipline and business acumen relating to portfolio management during expansionary/contracting economic cycles. Demonstrated ability to recognize competitive opportunities to capitalize on current market conditions. Exceptional sales and marketing skills, along with a proven ability to learn new products, theories, strategies, and tactics – all while retaining the foresight to stay abreast of rapid changes in technology, evolving markets, and industry trends. Extremely well networked with industry professionals, trade organizations, brokers, attorneys, and potential clients. Proven credit discipline and risk mitigation strategies with the lowest loss ratio in the factoring industry.

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