Your Business needs Cash Flow, but You have Poor Credit…Now What?

Many business owners struggle to have sufficient working capital to keep their company up and running. The typical solution to this problem is taking out a bank loan to support their company through a rough patch. But what are the options when they have a limited or challenged credit history? While banks can be an aid to businesses, having credit issues will most likely result in being turned down for the loan.
The Good News
The good news is that there’s an alternative solution know as Accounts Receivable Financing. AR Financing takes a business’s existing invoices and uses them as collateral to provide a working capital line of credit. This allows the business to receive immediate cash flow from their own assets, without having to wait for payback from their clients. Businesses typically receive 70%-90% of the invoice upfront, then receive the remainder once their client pays, minus a pre-agreed fee. Since the business track records and debt profile of the client (the account debtor) is heavily weighed in the underwriting process, personal credit score or balance sheet strength is not a determining factor. Many AR Financing companies also provide third party services, such as collections, payment processing, account management, and underwriting, that are an added advantage for using their services.
Cash Flow Growth equals Business Growth
Overall, Accounts Receivable Financing offers many benefits for businesses with and without credit issues. The fast funding and quick application process allow for immediate cash flow when needed, eliminating a business’s everyday cash flow problems, such as being able to make payroll. Unlike a loan, a business uses its own assets for funding, so no debt is added to its balance sheet. Also, having accessible working capital allows it to grow its business.
Learn how Accounts Receivable Financing can benefit your company’s cash flow, contact SouthStar Capital today!