What To Expect When Applying For Accounts Receivable Financing

One of the easiest ways for a company to become liquid and get quick access cash is to finance against the invoices that they have on file. Not only is a loan of this nature faster to get than a typical bank loan, but it is also much cheaper and mitigates the risk associated with a large loan and high-interest rates. Before a business owner applies for a standard loan, they should consider using accounts receivable financing to help them overcome financial hardship. Here is what happens during the application process.

Initial Application

The first step is to apply for the financing. Most applications are simple to complete, as limited personal information is needed. Be sure to provide the invoice that will be borrowed against and the payment history of the vendor whose name the invoice is in. Some companies also require financial statements to validate the businesses ability to operate legally.

Verification Of Invoice

Once the information is received, the lending company will then verify that the invoice being borrowed against is valid. They will contact the vendor and ensure that the invoice is due and that they are aware of the outstanding amount. This is a critical step because the financing company will take over responsibility for collecting on the invoice and reduce the liability the owner of a business assumes if they refuse to pay it in the future.

Release Of Funds

Once all of the verification is complete, they will then release the funds. Most can send the funds as a wire transfer in a couple of hours, an electronic funds transfer in a couple of days, or via a check that can take up to two weeks. While a wire transfer does include an additional fee, it is the quickest way for a business owner to get their hands on the cash they need fast.

Don’t let unexpected expenses lead to a financial emergency. Contact the team at Business Factors and learn more about invoice financing and how it can help businesses of all sizes during tough economic times. Check out their website to learn more and take the first step in giving any business financial security.

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