AR Funding: Getting Capital From Your Invoices
If your invoices aren’t being paid, you might wonder if there is another way you can make them work for your business. AR funding might be your solution. This type of funding allows you to actually receive capital from the invoices that haven’t been paid yet. How it works is that a financial institution will purchase your invoices from you, just as you would sell any other asset. They will give you capital that you can use to do what is most needed in your business, and they will work to collect payment from the debtor. The process is generally easy, and could only take a couple weeks or less for you to get started.
The first thing you’ll need to do is contact the factoring company. Speaking with a representative will give you a better idea of how AR funding works and how it will benefit your company. You can also come to a conclusion about how many invoices you both think would be best to factor. As you give the factor information about your business, you can determine together whether this is an effective option for obtaining capital.
Next, you will have to write an application and supply documents to the factor. A sample invoice, aging reports for your accounts receivables, last year’s tax return and a business license are often the documents that will need to accompany your application. Of course, when you speak to someone representing the factoring company, they can let you know exactly what to provide so you can collect it in a reasonable amount of time. Having it all together can often speed up the process.
Finally, the factoring company will review your application and documentation. AR funding is not based on your credit, but rather that of your clients. Because of this, companies with poor credit often find the most success with this type of financial support. The factoring company will sit down and look at a lot of aspects that could apply to approval. If your company is approved for the financing, and specific invoices are also approved, you could have the cash in as little as one day.
Getting capital from your invoices doesn’t have to take months and headaches. If you are interested in obtaining more funds from invoices that haven’t been paid yet, it might be time to look deeper into AR funding. With so many flexible options available to you, there’s no reason you need to wait on those invoices without making a change to improve the way you do business.