Many businesses face the difficulty of having to wait 30 to 60 days for their commercial clients to pay their bills. In the interim between delivering goods or providing services and receiving payment, these companies have numerous ongoing expenses. One solution to this dilemma is accounts receivable financing. Here are some steps you can take to enable this funding option to work for your business.
Set Up Your Account
When you apply for accounts receivable financing, the financing company first performs due diligence to confirm that you qualify for funding. This involves checking the background of the company’s owners, assessing the creditworthiness of your customers, and evaluating your receivables. When this process is complete, you will sign a contract, and your account will be set up.
Prepare Receivables
After your account is ready, you select the receivables that will be financed. These will be sent on to the financing company, which will verify the receivables with your clients to make sure that all the information on them is accurate.
Receive an Advance
Once the accounts receivables have been verified, the finance company sends you an advance. Usually, these advances average around 80 percent of the value of the invoices, and you receive the funds by direct deposit or wire transfer within one or two days.
Finalize Payments
Your clients send their payments to the financing company. After these payments have been received, you are sent the rest of the payments from the accounts receivables, minus the finance company’s fee.
Continue the Process
Upon completion of the initial account setup, many companies continue to finance their accounts receivables on an ongoing basis. This helps them to keep their cash flow stable and enables them to meet their expenses and even grow their business.
For more advice on using accounts receivable financing to strengthen your cash flow and keep your business running smoothly, get in touch with Commercial Capital Finance.