Accounts receivable financing is used by businesses to convert sales on credit terms for immediate cash flow. 1st Commercial Credit adopts a quick and simple approval process and expedites initial funding in 3 to 5 working days.
1st Commercial Credit provides a variety of purchase order financing solutions to meet your trade financing needs. P.O. financing is suitable for any wholesaler, reseller, importer or any company that purchases and resells goods.
Business owners in Seattle often find themselves in need of working capital at one point or another. There are many reasons why this happens, pending bills, slow-paying clients, or having a hiccup in operations. Unfortunately, most businesses only think of traditional lending such as bank loans or credit lines to solve their cash flow needs. Even though these options continue to be very popular, they might not necessarily be accessible to all business owners, specifically startups and entrepreneurs.
The reason why traditional forms of lending might not be the best solution to your financing issues.
Obtaining capital from the bank has been the standard way to go. Unfortunately, it has become increasingly more difficult for entrepreneurs and startups. Often the bank loan requirements are extensive and strict. One of those requirements is having a long and established history of credit which might be impossible for many small businesses just starting out. Bank financing also involves a lengthy and complicated process. Because of these and many more barriers to traditional bank lending, many entrepreneurs and startups have begun seeking alternative forms of funding.
AR financing is a safe and reliable alternative form of business financing that provides immediate and consistent working capital to businesses. It works by using a company’s accounts receivable as a basis for financing, allowing fast and predictable access to cash flow.
Accounts receivable loans give businesses the ability to improve their cash flow situation while focusing on other things instead of losing time and energy worrying about cash flow shortages.
What is the AR Financing Process?
1. Setting up an account- after finding the best fit in a factoring company for your business needs, you will set up an account with them. This will allow the factoring company to assess the fundamentals of the small business or startup applying. Some things that will be looked at include corporate taxes, the company’s receivables aging report, lien information, and clients’ credit profiles.
2. Choose the receivables to factor- the company will pick and choose which receivables will be used for AR financing. The company will submit these invoices to the factoring company.
3. Process of verification- once the services or goods are delivered to the customer, the factoring company will verify them. This process will ensure that all invoice amounts are correct and confirm their payment terms (30-90 days).
4. Financing the receivables - when the verification process is completed, the factoring company calculates the funds and deposits them into the company’s bank account. This can be as fast as 24 hours.
5. The transaction is finished - once the factoring company receives full payment and the funds are delivered, the transaction is settled.
Advantages of AR Financing
Many startups and entrepreneurs may find the setup of factoring to be a better fit for them. Overall, outsourcing accounts receivable by employing an invoice factoring company is a practical, cost-efficient method of small business and startup financing.
Businesses often find international trading a giant and scary step and, at the same time, the key to propel their business to the next level. In most cases, the biggest challenge involves the financial status of the business, specifically the available working capital. The length of payment terms when a company has international suppliers and customers are typically very long.
This situation can result in having to wait even longer before receiving payment. For example, when you receive an order from an overseas customer, you will contact your supplier to place an order. Often, suppliers require an up-front payment (or a large deposit) before shipping the goods to you, which can take a few weeks to arrive.
Once the goods arrive, you can process the order and forward the goods to your customer, taking a few weeks to come. In summary, all this process is pretty long and will require your company to make up-front payments before even being paid for the order itself. This out-of-pocket spending to fulfill an order will result in putting you in a cash flow predicament.
A solution to this is finding international factoring companies that understand and can work with your company’s specific needs. For example, 1st Commercial Credit offers export trade finance and international lines of credit to help make importing and exporting a smooth process so you can achieve all your business goals. Typically, there are two cash flow gaps with the international trade cycle. One at the beginning of the process where business owners have to pay upfront fees to suppliers. The other gap is at the end while waiting for payment from customers.
Trade finance helps with the first cash-flow gap.
Trade finance helps distributors, wholesalers, and importers pay for the goods they need to get the transactions moving. Lenders will pay the supplier directly on your behalf so that you don’t have to pay out of your pocket, knowing it could be months before getting that money back. The agreement is based on a confirmed purchase order and the credibility of the companies involved in the process. In addition, the lender will take on the initial cash burden so you can reduce the amount of time your business is taking big chunks out of the working capital so this money can be allocated somewhere else instead.
Invoice finance helps with the second cash-flow gap.
Businesses experience a second cash flow gap while waiting for the customer to pay for the goods delivered. These payment gaps are experienced with both domestic or international customers. Invoice financing gives you an advance of most of the invoice’s value right away. Then, when payment is received for that invoice, the lender gives you the remaining amount minus a small factoring fee. A few types of invoice financing include factoring, and discounting can be used for all invoices. In contrast, selective invoice finance works when a company only wants to finance the occasional invoice.
Businesses in Seattle can easily tap into their receivables assets for immediate cash flow, so their production line doesn't have to be disrupted. Your business will be able to offer credit terms to customers at an affordable cost, take advantage of early-pay discounts from suppliers, buy larger quantities, and many other opportunities. Accounts receivable loans use the company's unpaid invoices where money is tied to these unpaid invoices. Businesses need access to this cash to cover daily operations. Accounts receivables represent a line of credit extended by a factoring company in Washington.
Most companies must sell to their customers on flexible credit terms, which means they deliver the goods or services right away, send an invoice, and then have to wait a few weeks or months to get paid. Having a large number of customers is great for any business. The problems arise when some of them are paying late or are not paying and hurting your business. 1st Commercial Credit can offer the best financial solution to solve your business's cash flow issues.
The capital from manufacturing financing can be used to:
1st Commercial Credit provides the best financing solutions to manufacturing-related businesses. We can fund a variety of manufacturing companies. Many of these companies currently taking advantage of factoring their invoices include: Textiles, packaging , paper, plastic, wood, chemicals, machinery, electrical, transportation, food/beverage, auto parts, equipment, steel products, manufacturing, staffing companies.
Using Your Invoices As Collateral For Your Staffing Agency
Staffing agencies need to provide a paycheck at the end of the pay period even before receiving payment from the clients. Often, these firms don't have the capital to meet payroll until their clients pay them first. Staffing firms can avoid this situation by turning to accounts receivable financing for staffing agencies. 1st Commercial Credit provides factoring services for temporary staffing agencies in Seattle. In addition, we can help your business by delivering payroll funding and staffing loans. When companies pay their employees on time, they will perform better.
Is your Seattle staffing company growing faster than your capital?
We accommodate accounts receivable lines of credit for new staffing companies with minimal funding needs. We can also provide financing options like our asset-based lending solutions for larger, more established staffing agencies. 1st Commercial Credit responds to your financial needs and can facilitate initial funding within a few working days. We do not require up-front fees or any company financial records and offer competitive and affordable accounts receivable financing rates.
Many of our clients experience the following cash flow problems:
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