Many businesses look for ways to expand and bring in new customers. Opening a second location can be an excellent way of doing this. This can be a serious milestone for a lot of organizations. However, it is no small investment. Accounts receivable financing may be the solution you’re looking for to help pay for that expansion.
What Does Financing Receivables Mean?
If your business invoices customers and gives them time to pay, you likely are consistently waiting to be paid for work you’ve done or goods you’ve delivered. Sometimes this wait can interrupt your ability to invest in your business’ future.
Financing your receivables, also called factoring, is a great way to get paid now so you can invest in your business’ success. The factoring company buys your accounts receivable from you at a slight discount. It then collects from your customers. It is as simple as that.
What Are the Advantages of Factoring?
When you factor your receivables, you get money right away. This can simplify the cash flow for your business. Additionally, you can get this financing even if you have poor credit because it is based on your customers’ credit.
If you are struggling with debt, upcoming expenses or want to make investments, this is a simple way to get money now. Better yet, this source of financing grows with your business. So, if you invest in growth, you will get have access to even more funds. It is a great way to grow your business.
Can This Help With Opening a Second Location?
Factoring is an excellent way to get some extra funding to open a second location. However, you should consider whether your organization is in the right position to expand or not. You are essentially getting access to your income sooner. So, if you aren’t making enough sales to fund an expansion, you will need to reconsider or look for capital elsewhere.
Nonetheless, you aren’t taking on debt or making equity sacrifices. Instead, you are selling an asset and its future value. This is optimal if you can raise enough money this way and afford to use the funds to open a second location. For businesses that carry consistently high accounts receivable, this could be an excellent financing option.
Learn more about accounts receivable financing and how it could help you open a second location. This could be an opportunity for you to realize your expansion goals.