AR Financing for the Food Packaging Industry
The food packaging industry offers a number of lucrative business opportunities through customer contracts of all sizes. Contracts come with a fair amount of give and take to benefit both parties, and frequently that means aging period on invoices ranging from 30 days on up to 120 days. As a food packaging company continues to fill their contracts, as well as other customer orders, waiting on payments can quickly place a strain on cash flow, creating a situation where more capital is being used to cover the cost of production and regular operations than there is coming into the business. In order to remedy this situation, and prevent it from happening in the future, many food packaging companies employ AR financing Services.
How AR Financing Services Work
AR financing (accounts receivable financing) services are set up between a food packaging business and a commercial finance company in order to monetize open contract invoices and turn them into capital. The initial agreement can be arranged in under 72 hours, and open invoices can be converted to cash within 24 hours from the time they are submitted. This completely eliminated the aging period on contract invoices, and gives food packaging companies the ability to get the money they are owed (minus a processing fee) and alleviate any strain on cash flow to keep the business running smoothly.
AR Financing Is A Debt-Free Solutions
There was a time when food packaging businesses would take out bank loans in order to keep operations afloat. The drawback to traditional loans is that they place debt on the balance sheet, so even after the money is put back into the business, a good portion of the revenue goes toward repaying the loan, which can take years. AR financing, on the other hand, is a sale on receivables, so there is no debt to worry about, and invoices can be processed all at once, or as they are created.
Contact Us To Learn More
If you own a food packaging company and would like more details about our AR financing program, contact Davis Commercial Finance at 916-412-5577. We can arrange financing to remove the strain on cash flow and ensure your business gets the revenue it is owed. Davis Commercial Finance has the capital resources to cover invoices of all sizes, for short and long-term AR financing agreements.