Is Accounts Receivable Financing for Me?
There are many different ways to get the financing you need and some options might make more sense than others. While you have general business loans, sometimes you need an alternative that suits your needs. At Service Capital, we can give you the option to turn to Accounts Receivable Financing (otherwise known as Invoice Financing) and Invoice Factoring.
Both of these terms might not mean much to you right now, but we’re here to help break it down so you know if they make sense for you and your business. While both require you to use your invoices to get any form of funding, Accounts Receivable Financing will net you a loan whereas Invoice Factoring will provide you with a cash advance.
Let’s start with Invoice Factoring. This option allows you to sell unpaid invoices to a factoring company for an amount that’s less than what’s owed. In exchange, you’ll get an amount back quicker and then the factor assumes responsibility for collecting what’s owed on the invoice.
On the other side of things, you can lean into Accounts Receivable Financing (or Invoice Financing). Like its Invoice Factoring sibling, you can use this to get quicker access to cash and grow your business, although it works a bit differently. To get this off the ground, you’ll use your invoices as collateral in exchange for money from a lender. You’ll still be on the hook for making sure the payments come through, however. Because this method requires slightly less work, the fees are typically less high than Invoice Factoring.
In any case, using your invoices to get a loan is entirely doable and can be a great way to use your unpaid invoices to get money fast in a pinch. Naturally, choosing between the two can be a bit tricky on your own. Service Capital can help guide you through this process and ensure that you make the best decision possible for you and your business.