Accounts Receivable Financing
Many companies finance their accounts receivable to fill a gap in the timing of cash flows. Receivables that arise out of the open sale of manufactured goods with no service warranties no return rights, or no other payment contingencies attached are the highest quality receivables from a collateral standpoint. In this case consummation of the sale can be proven relatively easily with proof of delivery. In contrast, receivables arising from services rendered are of lower quality because it is more difficult to show a sale has actually taken place, that is, the service was provided as agreed. Receivables generated under a contract have the added uncertainty regarding whether the final products or services meet the requirements of the contract; thus increasing the chance that the buyer will dispute the validity of a portion or all of the receivable.
Accounts receivable financing is one way for small businesses to manage cash flow difficulties on a short-term basis. By using receivables from services rendered as collateral for business loans, companies can bridge the gap between the time the services were provided and the time when payment is made, allowing them to enjoy added flexibility in their financial arrangements. The likelihood of obtaining financing by using a receivable as collateral depends on the quality of the account receivable itself. These debts are more valuable when they are owed by companies with good credit histories and a record of paying on time. High quality receivable amounts are a solid source of collateral for short-term lending arrangements.
CNF Exchange can help small businesses compile and create applications for account receivable finance arrangements that can attract funding from lenders. By thinking outside the box and providing documentation and support for receivables loans, small businesses can often achieve the necessary funding for continued operations, resolution of cash flow difficulties and acquisitions of equipment, materials or properties. CNF Exchange takes the stress and worry out of the financing process and provides a solid basis for future growth and expansion for small businesses in a wide range of industries. This valuable assistance can make it easier to obtain the necessary financing for ongoing business needs. Contact CNF Exchange to learn more about online accounts receivable financing today!