Accounts receivables are a necessary part of many businesses. A lot of potential customers can be lost if you do not allow businesses to pay invoices with net terms, whether 30, 60, or 90 days.  However, you can lose a lot of money if you don’t collect on those receivables.  How do you offer the benefit, without suffering the consequences?

How to Manage the Double Life of Accounts Receivables

Accounts receivables really can lead a double life of sorts. On the one hand, they lure in customers with their appeal.  On the other hand, they can cause major cash gaps simply by their nature. Those gaps can fill with unpaid obligations quickly if there is no bridge over them. 

Bridging the Gap of Accounts Receivables

So, the question becomes, how do you enjoy the benefits without the gaps. The answer is accounts receivable financing. In fact, this answers more than one question.  Not only is it a way to bridge cash gaps, but it is also a way to fast access to cash for other needs.

For example, you may not have an unmanageable cash gap, but rather you need to take advantage of special pricing on a bulk purchase. Maybe you do not want to exhaust your cash on hand, or you do not have the cash on hand. Either way, you can leverage your accounts receivable to finance more than just cash flow issues due to slow collections. 

How Does Accounts Receivables Financing Work?  

Credit Suite can help you get up to $10 million in account receivable financing.  Up to 80% of receivables can be advanced within 24 hours.  Interest rates range from 8% to 12% currently. The minimum credit score requirement is 500, and the receivables must be from another business or government agency, not an individual.  You also have to be in business for at least one year.. In addition to an application, you’ll need to provide a breakdown of existing receivables and a sample invoice.

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This is an ideal way to access fast cash for your business for a number of reasons, especially if your credit isn’t the best. Not only that, but the interest rates are much more reasonable than that of most credit 

cards.

Merchant Cash Advance

If you accept credit cards as payment, you have another, similar option to accounts receivables financing. 

It’s called a merchant cash advance.  Our merchant financing program is a good fit for businesses that accept credit cards and need fast, easy financing.  You can get up to $500,000 without collateral and a minimum credit score as low as 500.

You only have to turn over bank statements to prove cash flow.  The lenders we work with do not ask for other documents such as financials, business plans, resumes, or any of the other documents traditional lenders typically ask for.

Just  4-6 months of your bank and merchant account statements is all it takes. They just want to see consistent deposits and annual revenue of $50,000 or higher. Also, you do have to have been in business for 6 months or more.

They will also look to see if there are a lot of Non-Sufficient-Funds showing on your bank statements, or low chargebacks on your merchant statements.  More than 10 deposits in a month going into your bank account is a key positive factors

Lenders want to see that you manage your bank and merchant accounts responsibly and have a fair number of consistent credit card transaction deposits each month.

What if You Do Not Have Accounts Receivables or Accept Credit Cards?

Maybe you don’t have accounts receivable. That may mean you do not have the cash gaps that can come with them, but you might still need cash access anyway.  There are other options. One of the most flexible but least known types of business financing is the Credit Line Hybrid.

A credit line hybrid is unsecured business financing.  It allows you to fund your business without putting up collateral, and you only pay back what you use.

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Unlike accounts receivables financing, you do need good personal credit to qualify for the Credit Line Hybrid on your own. Your personal credit score should be at least 685.  In addition, you can’t have any liens, judgments, bankruptcies or late payments.  Furthermore, in the past 6 months you should have no more than 4 credit inquiries, and you should have less than a 45% balance on all business and personal credit cards.  It’s also preferred that you have established business credit as well as personal credit.

However, there is a way around those requirements if you don’t meet them. You can take on a credit partner that meets each of these requirements.  Many business owners work with a friend or relative to fund their business.  If a relative or a friend meets all of these requirements, they can partner with you to allow you to tap into their credit to access funding. 

Top Ways to Use Funds from A/R Financing, Merchant Cash Advances,  and The Credit Line Hybrid

The Credit Line Hybrid is an option if you do not have accounts receivable or do not accept credit card payments. However, if you qualify for more than one, you can combine them for even more powerful business funding. 

You can use each one separately or together to do any of the following, and more!

• Pay off higher interest debt to lower monthly payments.  
• Bridge a cash gap due to slow collections or seasonal issues. You could never have to worry or stress about large invoices being paid slowly or slow business in the off season ever again.
• Cover bills during a global pandemic. Can you relate?
• Purchase inventory in bulk to take advantage of promotional pricing. 
• Grow and expand your business by adding equipment, adding on to your building, or even opening a new location.
• Fund updates and repairs. Don’t let the little things, or big things, slide because you can’t pay for it.

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That said, the Credit Line Hybrid does have one bonus that the accounts receivables funding and merchant cash advance does not.  The Credit Line Hybrid reports to your business credit report, in turn helping you build a stronger business credit score. 

Why Does Your Business Credit Report Matter? 

If you made it here from a quick search about accounts receivables financing, you may be asking yourself what on earth a business credit report has to do with anything. The quick and dirty is, a strong business credit score can increase fundability and allow you to access even more funding for your business. 

Fundability is the overall ability of your business to get funding.  Not sure where you stand or what kind of funding you can get? Try a free consultation.

Accounts Receivables Financing Can Be a Lifeboat for Your Business

Accounts receivables can truly be a blessing or a curse. They are a great tool to help you draw more business. The ability to pay later is a huge benefit, and it can make the difference between a potential customer lost and a new customer.

However, if collections become an issue, the curse can kick in.  Accounts receivables financing is a great way to overcome the curse and keep the blessing. That’s not the only way to use this kind of financing though. 

Your accounts receivables can be leveraged to get funding your business can use to not only survive, but to thrive. If you do not qualify, a merchant cash advance or the Credit Line Hybrid can help as well.  If you qualify for all three, you can get triple the funding to grow even more!

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