Is Accounts Receivable Financing for All Businesses?

Accounts receivable financing is a method of financing that leverages a company’s receivables into immediate cash flow which can help meet the working capital needs of a growing company, but is this good for all businesses.  It sounds like this would be a simple answer…but it’s actually not.

Some companies account receivable financing needs are great, but others do not require this type of financing.  Companies that would obviously benefit would be companies with high receivables, right? Wrong.  Many importers and logistics companies have large amounts of receivables, but accounts receivable financing would not work in many of their cases because their margins are too small.  Typically, if a company has margins under 12%, then the company needs to examine its use of account receivable financing carefully because the cost is often around 1.5 to 3% which might be equal to their net profit.

Business finance companies that have experience in the art of accounts receivable financing and will often be able to advise a company, but if you know your company’s margins are small and the factoring company does not ask about these details then you know you should be shopping for another invoice factoring company.

Traditionally, a business should have +30% gross margins to use account receivable financing as a tool.  This is necessary because there are many Sales and Administrative costs which can reduce a gross margin to almost zero so adding a financial cost from business finance companies can be too much to burden.

Accounts receivable financing needs to carefully thought out and approaching business finance companies or factoring companies with a long history definitely will help your outcome result in success.

How to Make Your Business Assets Grow Quickly….....

As a small business owner, if you are finding it difficult in increasing your fixed assets, then don’t despair…there are many ways to grow.  For increasing your business assets, banking with factoring support is one great solution.  Many businesses face serious trouble in having enough money in their fund to meet the financial problems, commonly referred to as “cash flow problems”. The good flow of cash ensures that the overall finances of a company are not endangered for to a particular transaction. Invoice factoring can assists small businesses to cut out such serious cash flow problems.

This method is used for increasing and generating sales and improving the market reputation of a company.   Invoice loans is chosen by many businesses because of its smart approach and wonderful pay back options that it provides a company. It helps the businesses to gain instant cash and the capital that can be used for making more inventory purchase to generate more revenue. It is a strategy that works for most companies and allows them in enjoying the most of their business opportunities. 

Invoice loans do not need the small businesses to pay back the money instantly or after a certain period of time. Along with that, there is also no interest rate levied on the money provided to your business by the company that issued the loan. 

Invoice factoring  supports the small businesses to gain excellent opportunity to enhance their business prospects and scope of increasing their sales. It helps the small business take on new customers and grow their customer portfolio and become more diversified. Business finance companies that are experienced can offer customized solutions to small businesses for meeting their financial needs and demands. Flexibility offered by these companies is a key factor that has contributed in the growth and development of this service. It provides an edge to the small businesses over their competitors in the market and also helps them to buy the required products that they need for upgrading their company or for meeting the demands of their customers. 

The major benefit of this service is that it helps the small business to gain cash easily through which they can market their products and services to more clients, sell more products and hire more services to the existing customers. 

PMF Bancorp is among the few leading US private commercial lenders, and PMF is one with the most experienced and trusted Business finance companies in the US as well for over the last 30 years. The company has a bright brand name in the market and specializes in invoice loans through which it assists the small businesses to develop and grow rapidly. It has a long and well respected reputation in the market for providing a great invoice factoring usa solution for small business. Read More

Factoring Invoices is a great Cashflow Solution for Importers and Wholesalers

Whether your business is large or small, factoring invoices which is sometimes better understood as, AR Financing, is a simple and quick solution to tap into cash that is locked-up in your company.  I will give 3 quick ways that business receivable factoring is a solution through an illustration of a past client that was an Importer and a wholesaler in the U.S. This company designed and imported trashcans to the large “Big Box” retailers so AR Financing was vital…let’s call them the “Trashcan Company”.  PMF Bancorp, the name of our factoring company, provided the Trashcan company with advances on a daily basis so they could pay their manufacture and employees timely. Because the large “BigBox” retailers paid so late, the cashflow for our Trashcan Company could not keep up with timely payments to their manufacture and employees.  The AR Financing (or Factoring invoices) that PMF Bancorp provided kept the Trashcan Company’s credit in good standing.  The third positive item that resulted from PMF Bancorp’s factoring invoices for the Trashcan Compa discounts from their vendors due to early payments due to their improved cashflow.    AR Financing allowed this company to grow 300% in 6 years… a real story as I am the portfolio manager.  

Factoring Invoices is a great Cashflow Solution for Food Service

Whether your business is large or small, factoring invoices which is sometimes better understood as, AR Financing, is a simple and quick solution to tap into cash that is locked-up in your company.  I will give 3 quick ways that business receivable factoring is a solution through an illustration of a past client that was a food service company.  This company made breakfast and lunches and delivered them to hospitals daily…lets call them the “Food Company”.  PMF Bancorp, the name of our factoring company, provided the Food Company with advances on a daily basis so the Food Company could pay their vendors and employees timely. Because the hospitals paid so late, the cashflow for our Food Company could not keep up with timely payments to their vendors and employees.  The AR Financing (or Factoring invoices) also kept the Food Company’s credit in good standing.  The third positive item that resulted from PMF Bancorp’s factoring invoices for the Food Company was that they were able to receive discounts on their supplies due to early payments from the increased cashflow.  AR Financing allowed this company to grow 300% in 3 years… real story as I am the portfolio manager.