Accounts Receivable Funding

AR funding is the sale, at a discount, of a company's accounts receivable.  You get cash immediately and others wait for your customers to pay.  Receivable funding provides over 100 billion dollars to industry each year.  It is an old financial service used by multi-billion dollar corporations.  It is now available to smaller sized businesses. 

Accounts receivable funding is an alternative non-debt financing approach that gives you the cash you need to grow.  AR funding is not a bank loan.  It greatly improves working capital without borrowing.  It does not require hard assets, significant operating history, or a stellar credit history.  If you invoice, AR funding is an option for you.

Money is available quickly when you need it most.  It is simple to set up an account, which usually takes about a week.  Once an account is set up with verified invoices, you normally have funding within 24 hours. 

AR funding can be a flexible credit line secured by the company's receivable.  You can sell some or all of your invoices; it is your choice.  You can sell only what you need to fund your growth.  Cash availability is directly proportional to the volume of your sales.  Thus, AR funding is essentially a line of credit that grows as your business grows.

AR funding can benefit you whether you are a manufacturer, distributor, wholesaler or service business.  All you need to start is commercial accounts receivable.  AR funding will get you the working capital you need now and improve your cash flow. 

Benefits

·        Finance rapid sales growth
·        Smooth out uneven cash flows
·        Raise additional working capital without borrowing
·        Allow credit terms to attract new and larger customers
·        Create immediate cash for expansion or equipment purchases
·        Take supplier discounts for early payment of volume discounts
·        Simplify the collection process - saves in-house staff costs
·        Eliminates the need for bank loans that must be paid back
·        No debt on your balance sheet
·        Improves your credit rating providing cash to meet obligations
·        Pay back taxes, liens, or judgments
·        Eliminates the use of equipment, or real estate for collateral

Case Study:

A small painting company specializes in painting apartments after tenants leave.  Once their job is complete, they bill the complex manager who forwards the invoice to the management company.  Usually, it takes the management company sixty days to pay.  The painting company must pay its crews every Friday and suppliers each month.  The painting company eventually uses all of its working capital to meet payroll as they wait for payments.  Meanwhile, they are turning down new business due to lack of cash flow.

The painting company sets up a AR funding arrangement with the help of Capital Logic.  The funding source purchases $50,000 in invoices and advances the painting company  $35,000.  The painting company receives the balance of $15,000 less any accrued fees, when the invoice is paid,

Results:

The painting company has increased its annual sales volume from $330,000 to $550,000 in less than 9 months.  More crews now take on new business immediately.  A contract with a large national account is being negotiated with payment terms of 75 days... terms which are no longer a problem for the small painting company.