What Are Accounts Receivable Funding Companies?

Estimated reading time: 3 minutes

When you’re managing your own small business, it seems there is no end to the amounts of expenses it requires. You know the phrase, “you have to spend money to make money,” but man! Sometimes it feels like there isn’t an end in sight. How do you get funding to take your company to the next step? You’ve heard of lenders and investors, but what about accounts receivable funding companies? They could be your business’s best option to take itself to the next level.

Types Of Funding

Small business owners have many different types of funding options. Most fall into one of two categories: equity or debt. Equity is giving someone a bit of ownership in exchange for some monetary support. Partners, angel investors, and venture capitalists are all examples of equity funding. With debt, you keep your ownership, but you’ll have to pay creditors back—often with interest. Creditors include lenders, small business loans, and banks. Depending on the agreement, crowdfunding or borrowed money can be either equity or debt funding.

Accounts Receivables

You know all about your accounts receivables. They’re the outstanding invoices you’re waiting for your clients to pay. Business-to-business (B2B) and business-to-government (B2G) dealings can often take a while to get paid. It’s so frustrating because it’s YOUR money. You did the work already—you’re just waiting on getting paid for it. But did you know you can SELL your accounts receivables to gain access to your money now?  

Accounts Receivable Funding Companies

Accounts receivable funding companies purchase your outstanding invoices. It starts with reaching out to get a quote on their services. The application process is much simpler than that of a bank or lender. They typically pay about 80% of the accounts receivables value in a matter of days. After that, it’s the funding company’s responsibility to get that invoice paid. Once the customer pays the invoice, the funding company pays your balance, minus a small service fee. No loans, no interest, no headache!

How To Use Accounts Receivable Funding

There are no restrictions on how your business can use those freed funds. Remember, money from selling accounts receivables was always your money to being with. Simply put, accounts receivable funding companies help you access it sooner. Once they purchase those invoices from you, they are no longer your worry! You’re free and funded to start your next project.

• Is there some new equipment you’ve been eyeing? Sell your accounts receivables and equip your business with new resources!
• Ready to revamp your website or start a marketing campaign to boost your sales even more? Funding companies can process your payment in a matter of days so you can begin advertising ASAP.
• Stockroom looking a little low? Increase your inventory, so you’ll be ready for the next surge in sales.