Why A/R financing flexibility helps your business

Graphic design image of 3 invoices with arrows pointing to money - TAB Bank

by Curtis Sutherland, VP Accounts Receivable

At first, accounts receivable financing may sound like just one of many options you have for accessing funding for your business. Understanding what makes it so unique among all the available alternatives, and how it's positioned to help your company in a way that those other financing choices often can't.

What is A/R financing?

The technical description of A/R financing, as something involving debtor finance and the sale of invoices to a factor, may seem confusing to those without a business finance degree or background. However, there's a definition that's just as accurate and much easier to understand: In A/R financing, your business takes current unpaid invoices sitting with your accounts receivable team and sells them to a trusted financial partner that then provides funding in return. It's an easy way to leverage a specific asset and receive the money your company needs to stabilize, grow and diversify in return. With A/R financing, your organization can use as few or as many of your unpaid invoices as you want, which is a core element in A/R financing's flexibility.

Why A/R financing is so flexible

Many types of business financing involve an agreement to receive a predetermined amount of funding in a lump sum or relatively short series of payments, then pay that money back with interest over a longer period of time. Businesses that are absolutely sure they need a specific amount, and no more or less, can certainly benefit from this arrangement. However, companies that want to apply funding to less easily defined goals and more variable concerns may find themselves in a position where they have borrowed too much or too little. While there are ways to secure additional loans or pay down the principal of a loan, all of these options add additional complications to days that are already packed full of work.

A/R financing, on the other hand, allows your company to use each invoice as a separate asset that can be converted into business financing. That makes it much easier to efficiently address financial needs that are impossible to predict. In situations where your business may have a slow quarter or is simply dealing with long repayment timelines that are common in some industries, the ability to access money already owed to you can be a major benefit. And if the next quarter is more robust or your clients decide to make faster payments, your company doesn't need to continue using A/R financing at the same rate. Your organization makes the decisions that lead to the best outcome instead of having to worry about the long-term impacts of a loan repayment schedule or the difficulty of securing additional funding.

The TAB Bank difference

It's easy to see how A/R financing stands out from other types of business lending. But what makes TAB Bank's approach to A/R financing so much better for your business than the alternatives offered by other financial institutions?

TAB is built on strong relationships with our customers, which is why we assign a dedicated relationship manager to each and every account. With easy access to a knowledgeable and supportive partner, you know your company can have fruitful discussions about A/R financing as well as our other business lending and banking options. We also offer credit analysis and collections management services included with A/R financing agreements, which can help your business make more informed and beneficial decisions going forward.

A/R financing can help your business realize the best financial position possible. To learn more about what we have to offer, check out our dedicated A/R financing page and reach out to us today!  Don't hesitate to also check out our eBook titled, When do you know you need A/R Financing?  Click on the tile below to access this valuable resource.


When do you know you need A/R financing?

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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