Your Guide To Selling Receivables in 2018
When your business is strapped for cash, it might seem like taking out a loan is your only option. Loans have a long approval process and charge you interest when you go to pay them back. Luckily there's a better way to get cash for your business in the short term without having to take out costly loans. United Capital Funding can help turn your unpaid invoices into working capital in no time. It might sound complicated but that's why we put together this guide to selling receivables in 2018.
How Accounts Receivable Financing Companies Can Help
Accounts receivable financing at first glance sounds like a tricky topic. While it can be complicated it boils down to a simple fact that companies often need more cash than they have on hand. Accounts receivable financing helps companies who need their invoices paid so they can pay their employee and have cash on hand for miscellaneous company business. This type of financing is very beneficial to companies who need working capital and can’t afford to wait until their invoices are paid, or something never paid. United Capital Funding can help you turn your invoices into working capital so you can continue business operations.
Government Invoice Factoring in 3 Easy Steps
Landing a government contract for any business can be exciting. It means a steady stream of income to support your business. But, because the nature of these contracts is very complicated, it usually takes some time before you will see results. That’s where government invoice factoring comes in. At United Capital Funding, we provide working capital for your business so that that you have the money to operate while you are waiting for your invoices to be paid. We are a simple way to turn your accounts receivable into working capital for your business.
A Business Case for Account Receivable Factoring
Accounts Receivable factoring is a business tool used all around the world. However, it is a relatively new practice in America, and common misconceptions prevent businesses from pursing this credit tool.
What is Account Receivable Factoring?
Simply put, it is selling Accounts Receivable at a discount. Accounts Receivable factoring is not a loan; the business sells its invoices and receives cash. Then, the factoring company has the right to receive future payments from the client.
How Does It Benefit Business?
The main benefit is that factoring Accounts Receivable allows the client to receive immediate cash. Instead of waiting on payments from customers, the liquid cash flow remains consistent, which allows for day-to-day production. Additionally, factoring Accounts Receivable prevents the business from turning into a collection agency. Collecting the payments becomes the job of the factoring company. Business can continue as normal with a working cash flow.
Accounts Receivable factoring is different from a traditional bank loan. This makes it an appealing option for businesses that are reluctant to sign a personal guarantee on a bank loan.
Why Is It Better Than A Traditional Loan?
Banks are interested in getting their money back, no matter the cost to the individual. Traditional lenders hit companies with a variety of fees such application fees, credit check fees, and due diligence fees. With United Capital Funding, there are no up front or out-of-pocket costs, which can save tons of money. It is sometimes an uphill battle for small businesses to receive traditional loans.
Factoring accounts receivable is a smart business decision, and it is part of almost a $3 trillion industry with a proven track record worldwide. Be one of the innovative entrepreneurs to take advantage of accounts receivable factoring before your competitors.
Rights You Give to the Factor as Part of a Receivables Financing Agreement
One benefit of receivables financing is passing off some responsibilities and internal workload to the factoring company. However, it’s important to make it clear what your business will do and what the factoring company will do. Make sure you understand what rights and actions you are assigning to the factoring company. With your permission, the factoring company will do things in your name. If there is anything that makes you uncomfortable, negotiate that up front. You can also keep some rights for your business.
Find Out What You Are Signing Away
First of all, get everything in writing. Make sure no agreement or responsibility is given verbally. This can help eliminate confusion and potentially uncomfortable situations. Also, getting it in writing provides a clear-cut list for your business and the factoring company.
Now, it’s time to tackle what rights and responsibilities are now that of the factoring company. First, determine if they have the right to receive, take, endorse, assign, deliver, and accept deposit proceeds. Do they have these rights on all accounts, or only factored Accounts Receivables? Determine if the company has the right to file mechanics liens and related notices.
Also, figure out if the factoring company can change the address for delivery of mail. Can they open mail? These are common practices for factoring companies, but still make sure you are comfortable with them. If you allow this, do you want this right to only apply to Accounts Receivables or all your accounts? Another thing to thing about is if they file a claim. Should they file claims under payment bonds?
Determine Collection Rights
Professional collection services can be a significant benefit of receivables financing. Figure out if you want your factoring company to communicate directly with your clients. Also, you can outline how you would like the factor to communicate when collecting invoice payments. These are your clients, so you want them treated with the utmost respect and consideration. A factoring company should not be damaging your reputation with clients.
Once again, do you want them to collect from all accounts or only factored Accounts Receivables? When they begin invoice collection, specify how you want them to notify the client. Determine how they should go about contacting the client and how often.
A factoring company and receivables financing can help you with more than just cash flow. A factor can provide a variety of services that can speed business production, and take responsibilities off your hands. You can learn more about that here. However, if you are uncomfortable with a factoring company handling some of these responsibilities, negotiate that upfront. All of these questions might seem like a lot to address, but it’s worth it when you can negotiate a perfect agreement with receivables factoring.
Are You A Candidate For Capital Funding?
You might think that you have to be in financial trouble in order to seek services from United Capital Funding. Our ideal customers are actually companies with solid, growing businesses. Sometimes you need more working capital to keep your business running, and United Capital does just that. We are a factoring company, which means that we purchase accounts receivable from our clients with our own capital and resources to give you the capital you need to grow your business.
Is Your Company Right For AR Factoring?
Companies who are good candidates for our accounts receivable factoring usually have a few characteristics in common. We want to put your company in a position to grow, and these qualities are strong indicators to tell if we can help you. Some of these characteristics include:
- B2B (business to business) or B2G (business to government) companies
- Quality client base
- Quality products and services
- A high growth rate
- Highly leveraged companies
- Start-up companies
- Under capitalized companies
- Businesses with a high number of accounts receivable
At United Capital Funding, we understand how difficult it is to operate without working capital. That is why we offer personalized solutions to help your business achieve its goals and vision. These characteristics are key indicators which help us chart the best path to provide what you need to run your business.
Industries We Serve
UC Funding provides accounts receivable factoring services on a national scope and we have worked in many different industries. While we will work with any industry to help you meet your goals, our main areas of expertise include staffing, government, manufacturing, information technology, service businesses, and security guard factoring. These market segments have demonstrated a strong need for accounts receivable factoring due to the nature of their business. We understand that these are not the only fields in which our services could be beneficial. United Capital Funding has the flexibility to work with clients in diverse fields to give them the tools they need to grow their business.
Does My Business Qualify?
If your business aligns with one or more of the characteristics listed above, then you would be a good candidate for capital funding. Here at UC Funding, we want to give businesses the potential to grow and achieve their goals. Sometimes all that stands in the way of that is a lack of working capital. If you are a company who regularly completes B2B (business to business) or B2G (business to government) sales transactions with open accounts receivable, then you may qualify for accounts receivable factoring. If you think that this service would be beneficial for your company, we strongly encourage you to obtain a quote. See how United Capital Funding financial services can make a difference for your business.
Let Us Be Your Differentiating Factor
The bottom line is that we want to see your business succeed. At United Capital Funding, we strive to put you in a position to thrive. Since we do not have to rely on funding from outside sources, we are able to provide lower fees to our customers, saving you resources. Give us a call for a quote at 877.894.8232, or obtain a quote through our online form.
Article Posted On: February 28, 2018