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Accounts receivable financing — which is sometimes referred to as factoring — is a type of asset-based funding in which you use outstanding invoices (or any other receivables) as collateral.
In return, you receive a lump sum that is less than the total amount owed — usually around 70 to 90 percent, depending on the lender and the specific details of the financing agreement. When an invoice becomes due, your customer pays the lender directly, who keeps an agreed upon portion to cover principal, interest and fees. Any remaining amount is sent to you.
There are some notable advantages to accounts receivable financing, including:
Accounts receivable financing may be a suitable funding solution for your business if you have a significant amount of money tied up in outstanding invoices, want or need rapid access to a lump sum of working capital, and want to focus on running your business vs. handling loan administration tasks.
Conversely, it may not be the right solution if you do not have sufficient outstanding invoices to cover all/most of your working capital needs, or if you do not have an immediate or short-term use for funds (in which case, applying for a business line of credit that you can draw down as needed may be a better option).
To learn more about accounts receivable financing, contact the National Business Capital team today by calling (877) 482-3008.
Or, apply today by filling out our 60-second online application start turning your invoices into cash in as little as 24 hours
We are here to serve you 24/7/365, and your consultations with us are always free, friendly and focused on what matters: helping you get the financing you need to keep your business strong and successful for years to come!
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Our Business Financing Experts work within our 75+ Lender platform to match you with the right option. Easily access the best low-interest SBA loans, short and long-term loans, business lines of credit and equipment financing all in one place.
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Joseph Camberato, CEO of National Business Capital, developed a passion for business at a young age. Joe started his company in 2007 in his spare bedroom and has grown to secure over $1 Billion dollars in financing for small business owners nationwide. National’s team has an amazing culture and has been name the #1 Top Workplace on Long Island 3 years in a row and counting. Joe is a trusted financial expert who’s published more than 2,000 articles in the last 3 years. His articles have generated over 5 million page views and has been featured on blogs such as Google News, Yahoo, CNBC, Forbes Magazine, etc. His passion has also inspired him to build the "GrowByJoe” YouTube channel where he shares his insights into small business trends and tips for growth. Joe also holds a seat on Forbes Finance Council and is an active member of the Young Presidents' Organization (YPO), a global leadership community.