Small Business Loans

Accounts Receivable Factoring versus Cash Advances

This type of financing (A/R factoring) has been around for decades and is often the best solution or simple solution for handling a variety of financial needs within a business. Factoring allows a business that has made sale and is waiting for payment from the buyer of the goods or service before the full collection period has passed.

A business cash advance is not factoring (per se) but a future factoring type product, so it offers some distinct benefits to a willing and qualified merchant prospect. One of many benefits to a merchant is that a business cash advance allows a business owner to cash-in on their future credit and debit card sales - sales that have not happened yet. Factoring requires a sales to be made first in order for the business to have an outstanding, uncollected invoice to factor. A Business Cash Advance eliminates this requirement.

In addition, the factoring process benefits a business owner because the business does not have to wait for the invoice cycle (typically 30-60 days) to be over before getting paid by their customers. Instead, they "sell" the accounts receivables to a bank or lending institution, which will in turn advance the business the amount owed on the invoices. It's important to keep in mind that in most cases, you will not receive 100% of your invoice amount upfront. Most banks will give the business an avance of anywhere from 65 to 94% of the total receivables. In addition, there is a fee, usually around 3 - 6%, but this amount is not owed until the invoice you have is paid by the customer.

A great benefit of accounts receivable factoring is that there are no "debts" per se, because you are simply getting money advanced on other monies already owed to you and your business by current customers. This method means you will have no set debts, and can stop the process at any time you wish.

A loan differs because it has an interest rate, payment amounts each month, and a length of time that you must continue to pay until the loan is completely repaid. With accounts receivable factoring, you are simply getting money you need in advance so you can cover the overhead it takes to run a successful business. This is a good way for business owners to be able to take care of the needs they have today without worrying about the expenses they may incur tomorrow.

Utilize US Business Finance Corp's Expertise in Getting Your Business Cash Quickly

The US Business Finance team of financial experts is ready to help you secure your company cash advance or help your with factoring your accounts receivables. Our professionals guide you through all the needed application steps in order to get you cash quickly. If you have any questions, please contact us at your earliest convenience.