Accounts Receivable Financing
WHO CAN BENEFIT FROM ACCOUNTS RECEIVABLE FINANCING:
BENEFITS OF ACCOUNTS RECEIVABLE FINANCING:
FASTER CASH FLOW
Accounts Receivable Financing (also known as Factoring) is an excellent way for companies to speed up their cash flow.
With Accounts Receivable Financing, Applied Capital advances 70% - 90% of the Face Amount of your eligible Accounts Receivable immediately upon our verification of the invoices to your customers. Instead of waiting 30 - 90 days to get paid by your customer, you get immediate cash. Now, you have turned “money that you are always waiting for” into cash in your bank account right now.
INCREASED WORKING CAPITAL
Since most businesses always have unpaid invoices out to their customers, if you can turn unpaid invoices into immediate cash through Accounts Receivable Financing, you increase the working capital in your business. You don’t just get money sooner, you get more working capital.
Also, as this additional capital is put to work in your business, your Accounts Receivable will increase. Now you automatically qualify for increased funding amounts from Applied Capital (i.e., 70%-90% of the increased Accounts Receivable amount). Unlike a bank line of credit, you do not need to wait until the end of the year to see if you qualify for increased funding.
PREDICTABLE CASH FLOW
Taking the guess work out of estimates on when your customers will pay allows for more predictable cash flow and more accurate business planning.
TRADE CREDIT DISCOUNTS
The additional working capital provided by Account Receivable Financing allows you to take advantage of early payment discounts from your vendors.
INCREASED SALES AND NET INCOME
More working capital employed in your business will allow you to take advantage of growth opportunities. Increased sales will result in increased Net Income. A typical small business with (1) a 60% cost of goods, (2) a 20% of revenue administrative cost, (3) a 10% of revenue marketing cost, (4) a collection period of 45 days on its invoices to customers, (5) an 80% advance rate on invoices from Accounts Receivable Financing, and (6) a 3% 30-day fee on financed invoices can increase its Net Income by over 60%.
AFFORDABLE FEES WITH NO ADDED DEBT
Since Accounts Receivable Financing is structured as a purchase of your Accounts Receivable, the funding is re-paid when your customer pays the related invoice. There are no loan payments involved.
Financing fees are a function of the credit worthiness of your customers and the amount of funding involved. Fees range from 1.5% - 5% of the Face Amount of invoices funded for a 30-day period.