Commercial Finance – 6 Benefits of Using Accounts Receivable


Small and mid-sized business owners have historically been limited in their options for commercial  finance . That said, innovative solutions have emerged, particularly in the form of invoice  financing  performed through the use of an online auction marketplace.

This market-based working capital solution allows small and mid-sized businesses to gain quick access to working capital that is currently tied up in their accounts receivable. Not only can a company get cash quickly and efficiently through this real-time auction process, but this form of  financing  provides additional benefits to businesses. Here are six benefits that a business can tap by using this solution:

1. Complete  Financing  Control- Small and mid-sized businesses maintain complete control of the transaction. The seller sets all the terms – the minimum advance amount, maximum discount fee and the length of the auction. Compared to other traditional methods of  financing , this is a unique feature of this form of  financing  and an attractive incentive for using the online receivables marketplace.

2. Fast Accessibility- You can sell an invoice today and the cash advance can be electronically deposited the very next day. The process really can happen that fast. No matter how many days it takes for the invoice to sell, the money is available within 24 hours once the auction closes.

That kind of fast access means that businesses can take advantage of any opportunity that comes along by simply converting their outstanding invoices to cash on this easy-to-use receivables marketplace.

3. Few Restrictions-This online receivables marketplace does not require all-asset liens, restrictive covenants dictating the actions of the business, or personal guarantees. Once businesses are registered and approved to sell their outstanding invoices, the only criteria is that the total auction value must be at least $10,000.

4. Access to working Capital without taking on additional debt- This is not a loan. In fact, accounts receivable  financing  allows you to increase liquidity and improve your cash flow without taking on new debt. The only real risk here is if the debtor fails to make payment.

By selling accounts receivable on this marketplace, you are participating in a “true sale” of the asset. There is a “repurchase obligation”. This means that if the account debtor, your customer, fails to pay the outstanding invoices, you, the Seller, are required to repurchase the remaining balance…

5. Seller Flexibility- Post one invoice or five, however many you will need to provide the amount of capital required to meet your business needs.. Use the auction site how and when you see fit – once a month or twice a week.

6. Privacy- The online auction site protects the privacy of the sellers and the buyers. The account debtor, your customer, does not know that their invoice has been sold to a third party.

In addition, because this is an open auction format,. the seller does not know who has purchased the invoice. The buyer(s) – a global network of accredited institutional investors – identity is kept anonymous.

When small and mid-sized businesses have to choose where to obtain working capital  financing , these six benefits make commercial  finance  through an accounts receivable auction platform an attractive alternative to other traditional lending methods like factoring and bank loans.

Source by Andrew Stratton

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