Accounts receivable financing can be a godsend for businesses with outstanding invoices. If cash flow trouble makes it tough to fund your day-to-day expenses, an accounts receivable loan could help. Here are the common questions Legendary Capital Solutions gets about accounts receivable financing.
Do I Need Accounts Receivable Financing?
Accounts receivable financing helps businesses better manage their cash flow. When you invoice your customers for work you’ve done, it can take some time for payments to come in. Multiply this across multiple customers, and cash flow can become an issue fast. An accounts receivable loan can cover the gap between you sending your invoices and your customers returning their payments.
If you struggle to fund your day-to-day operations while you wait for payments to arrive, an accounts receivable loan may help you stay afloat.
Accounts Receivable Loans Short-Term or Long-Term?
Since they’re intended to cover short-term gaps, accounts receivable loans are short-term loans. Some may be as short as 30 days, while others may extend to 90 days. However, most accounts receivable loans have 60-day terms. If you secure a 60-day loan, you’ll have 60 days to pay back what you owe.
What Happens to My Loan If I Don’t End Up Collecting All of My Expected Accounts Receivable?
Your loan will still be due once its term is up even if you did not collect payments on your invoices. That’s why it is important to look at your customers’ past payment history before you apply for accounts receivable financing. If your customers tend to take 60 days or more to pay you, you may want a longer loan term. But if they tend to pay promptly, a 60-day or even 30-day loan may be appropriate.
If you think accounts receivable financing could be the solution to your cash flow issues, get in touch with the Legendary Capital Solutions team. We can help you explore your options and decide how to move forward.
Disclaimer: The contents of this website do not constitute financial advice and are provided for general information purposes only. If you require specific financial advice, you should contact a financial advisor. We can only advise on the basis of specific client instructions and are unable to offer financial advice by email to people who are not our clients. To learn how to become a client of Legendary Capital Solutions, please contact us.