Getting Organized with Accounts Receivable Financing

The business world never stops. The constant ebb and flow of the industry make it easy for business owners of all experience levels to feel overwhelmed. When your access to available capital is impeded for one reason or another, it becomes a lot easier for your company to fall behind financially. Luckily, there are ways to improve your cash flow and find a sense of organization you require. One service to consider for this is accounts receivable financing. Look over these tips to discover how you can use AR financing to your advantage.

How A/R Financing Works

Also known as factoring, AR financing is a straightforward service involving unpaid invoices in your possession. When clients aren’t paying for services you’ve completed, you can sell the qualifying invoices to a company that specializes in factoring. The company will provide you with a percentage of the invoice value right away and provide the difference after collecting the full amount from your client. This advance can stimulate cash flow and help you focus on the more pressing aspects of running your company.

Benefits of Factoring

The biggest benefit you can expect from factoring is being able to take care of important expenses at a time when capital is scarce. What’s more, the advance provided to you by the factoring company is money you are already owed. This means that you don’t need to worry about accounts receivable financing services having a negative impact on your credit. The general flexibility of this service also makes it advantageous, as it can be used whenever you have qualifying invoices in your possession and require a bit of extra cash.


Though an advantageous service, it is important to understand that there are several regulations dictating which invoices will qualify for the service. For the most part, AR financing is only applicable to invoices from trusted clients. Government agencies, for example, are usually guaranteed to pay off the invoice down the line. This means government invoices are the most likely to be approved. Conversely, invoices from local or small businesses are not likely to see the same level of approval for factoring services.

The organization is key when it comes to the success of your small business. To get your company into a more stable and structured position, it is important for you to have a comprehensive understanding of your options in relation to the piles of unpaid invoices on your desk. Use these invoices with a service like accounts receivable financing and discover how to stimulate cash flow without putting yourself in serious debt.