6 Things You Shouldn't Be Assuming Regarding Accounts Receivable Financing

Posted on: 1 February 2023

If you're looking for a financing option for your business, you should be aware of the potential of accounts receivable financing. Accounts receivable financing is a great option for many companies. However, you need to be properly informed about this option to take advantage of it when it can come in handy for your business.

The following are six things that you shouldn't be assuming regarding accounts receivable financing. 

You can't get accounts receivable funding without a substantial business credit history.

One of the biggest obstacles to getting business financing is having established business credit. Accounts receivable funding provides a great financing option for businesses without a substantial business credit history.

It may be possible for your business to be approved for business financing even if your company doesn't have an established credit history. 

You should only seek out accounts receivable funding if your company can't be approved for a standard loan.

In some cases, accounts receivable funding might be a better option than a standard business loan. You may find that you can get approved for accounts receivable funding quicker so that you get the funds you need right away.

Even if you can be approved for a standard business loan, accounts receivable funding might still be the better option in a lot of situations. 

It will take a long time to receive funds with accounts receivable financing.

If you look into accounts receivable financing, you'll see that this type of financing allows business owners to get funds a lot more quickly than they can through some traditional types of business loans.

Accounts receivable financing is great when you need to get funds as quickly as possible because the approval process for financing is often very fast. 

It's too expensive to get accounts receivable funding.

You may be surprised at how low-interest rates can be when it comes to accounts receivable funding. You shouldn't assume that other types of business financing will be more affordable for you until you've looked into the interest rates available to you through accounts receivable financing. 

You have to submit every unpaid invoice to an accounts receivable financing provider.

Business owners sometimes think that accounts receivable financing can compromise their relationships with their customers because they have to provide sensitive information about important customers to their financer. This is not necessarily the case.

While you might have to submit some information on unpaid invoices to get accounts receivable financing, you don't have to submit every invoice. It's also important to realize that your customers might never need to know that you've gotten accounts receivable financing in many cases. 

Small businesses can't get accounts receivable financing.

Businesses of all sizes could potentially be approved for accounts receivable financing. You shouldn't assume that your business is too small for funding from an accounts receivable financing provider until you've done your research. 

Speak to a service like American Bank to learn more.