Why Are Companies Selling Account Receivable?

June 3, 2020


Every business owner encounters a situation where they need more cash for operations. You can have a superior product with large profits. However, if cash flow is bad, your business will suffer. It is possible to be successful in business but still encounter cash flow issues since good cash flow is essential to running a successful business.

When you invoice your customers, you are stuck waiting for them to pay the invoice. There are a ton of different ways companies end up in situations similar to this. Sometimes, they occur when a company offers their customer payment terms. Payment terms means there’s a gap between when you invoice and when you actually see that money. That’s where AR factoring comes into play. AR factoring goes by many names, but simply put, it’s when a company sells off it’s account receivables. Improving cash flow isn’t the only benefit of AR factoring.

Get Paid Faster, Do More Quicker

Companies can improve their cash flow by selling their AR to a factoring company like UC Funding. There are also many other financial benefits associated with AR Factoring. Our experts have put together some reasons companies might start selling their AR.

Typically selling your accounts receivable results in you getting paid faster. That’s even faster than other financing tools. With a small business loan, the paperwork alone can set you back for days. Waiting for a decision can take even longer—up to weeks in some cases. When you decide to factor your accounts receivable, decisions and payments can happen within a few business days. 

AR Factoring Offers Flexibility

You can achieve the same monetary results using normal financing options as you do selling your accounts receivable. You might run into a few bottlenecks by opening a line of credit. Selling accounts receivable offers more flexibility for your business. Qualifying for a line of credit is a lengthy process that typically requires you to meet a heavy collateral requirement. It’s common for small businesses to not be able to meet that requirement.

Another problem you find with business loans is how inflexible they can be. If you are a fast-growing business you need money FAST. Extending your line of credit requires you to repeat the underwriting process which can be time consuming and rigid. Factoring your accounts receivable allows you to grow as your business grows. As your qualified sales grow, you’re able to sell more and more of your accounts receivable. This gives you the freedom and flexibility to grow your business as you desire, on your own time.

Contact Our Factoring Company Today!

Selling your accounts receivable can be a confusing process at first. Fret not, UC Funding is here to answer any question you have for us. Don’t be afraid to let your business grow. When you run into cash flow issues don’t hesitate to give us a call. Send us a message or give us a call at 866.647.2680. When you’re ready to begin, fill out an application with us. We’re excited to work with you and your business!