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Accounts receivable is the amount owed to a business by customers who have not yet paid. Many businesses bill customers by invoice, and there can be a gap of weeks or months between the time the product or service is provided and when the customer pays. Accounts receivable is listed on a company's balance sheet as an asset.
Accounts receivable financing provides capital to a company based on the company's accounts receivable. This allows companies to get immediate access to the cash they were due to receive from customers in the future.
1st Commercial Credit has financial resources to help San Antonio based businesses, including nationwide and foreign businesses finance their transactions with San Antonio buyers and sellers. We have available unique financial solutions that help finance the supply chain that may include invoice factoring, purchase order financing and accounts payable financing programs
We are a flexible Texas factoring company when it comes to financing your accounts receivable. Small to large companies can pledge their receivables and obtain a line of credit using their unpaid invoices as collateral in only 3 to 5 working days.
Accounts receivable financing can be structured in a few different ways. The two main types of accounts receivable financing are asset sales and loan agreements.
The asset sale process is sometimes called factoring, and financing companies that use this system are called factoring companies. During an asset sale, a business sells its accounts receivable to the financier. The financier provides the business with capital to replace the value of the accounts receivable. Then, the financier takes over the invoices and becomes responsible for collecting the amounts owed. Most factoring companies will only buy short-term receivables, and they usually steer clear of defaulted receivables. They want to minimize the risk of losing out on payments, so they may only be interested in companies with recent invoices.
The terms of the agreement can vary depending on the size of the sale and the risk involved. The financier can pay up to 100 percent of the accounts receivable balance up-front, but most companies will pay around 80 percent. The financier may ask for the company's financial records or credit history as well as details about the invoices they're buying. Once the financier verifies the invoices, they will send the funds to the seller through a wire transfer or direct deposit. This process usually happens very quickly, and businesses can expect to receive their funds within one business day of verification.
The financier will pay the remainder of the balance when they receive the payments from the customers. However, they will subtract financing fees from this amount. Most factoring companies charge 3 to 5 percent of the total invoice value.
A factoring company (or accounts receivable factoring) converts invoices sold on credit terms for immediate working capital at a discount. It has become a simple, fast and easy way to access business cash flow. In comparison with a traditional bank loan, a company that factors receivables has a quicker approval process.
1st Commercial Credit is a factoring company that specializes in evaluating accounts receivable and can make a prompt approval decision. The documentation requirements are not as lengthy, and the main requirement is that an applicant has invoices for work or orders that have already been satisfied. It also helps to have creditworthy customers. As long as a business has been in operation, meets revenue requirements and is free of liens or legal issues, approval is likelier.
1st Commercial Credit is an experienced factoring company facilitating payroll lines of credit for staffing companies and recruiting agencies. The services offered by staffing companies are fundamental and vital to connect employees and employers in San Antonio. In this sector, payroll funding remains the responsibility of the staffing firm and needs to occur before customers pay. This situation can cause some financial struggles if clients have extended payment terms for these services.