Accounts Receivable Financing and Factoring

Generate a Positive Cash Flow

Any business owner can tell you that cash flow is essential to the health of their business. No matter how many items you sell each month, how many service calls you make, or how many products you deliver, if the stream of cash into your business from those sales hits a dam and begins to trickle in, your business can begin to suffer. If that cash flow is associated with accounts receivable, LaGray Finance’s financing programs can help you.

Since your Accounts Receivables are the lifeblood of your business, when customers neglect their bills or pay intermittently, cash wanes significantly. We offer Accounts Receivable Financing (Asset Based Lending) and Factoring options to access the capital you need to keep your business running smoothly.

Factoring vs Accounts Receivable Financing

Factoring and accounts receivable financing are two forms of financing based on “accounts receivables,” offering businesses an alternative to traditional bank loans. If you need cash now, you should consider these financing options. Both factoring and accounts receivable financing provide fast cash for working capital, without jumping through the hoops of traditional bank loans. Many business owners lump Accounts Receivable Financing (Asset Based Lending) and Factoring together but there are small but important differences.

Factoring is a financial tool that can help you improve cash flow, improve collections and control exposure to bad debts. Essentially, it provides you with working capital to run your businesses and have the peace of mind that you’ll get paid for approved and undisputed invoices through working with a Factor. Factoring allows businesses to fund their operations by selling ownership of their outstanding invoices at a discounted rate. If you have $20,000 worth of outstanding invoices, you might be able to sell them for $19,000 through factoring.

Accounts Receivable Financing, on the other hand, is more like a traditional bank loan but with some key differences. While bank loans may be secured by different kinds of collateral,

including plants and equipment, real estate, and/or the personal assets of the business owner, accounts receivable financing is backed strictly by a pledge of the business’ assets, associated with the accounts receivable, to the finance company. Accounts receivable financing is essentially a type of asset-based loan (ABL) in which a business obtains short-term financing by using its invoices as collateral. Unlike factoring, you still retain ownership of the invoices with accounts receivable. You simply place the invoice up as a collateral, giving the lender security and peace of mind knowing that the collateral can be converted into liquid assets if you fail to repay the loan. Because it involves collateral, accounts receivable financing generally carries a higher risk for borrowers than its factoring counterpart.

Understand the Limitless Options

What can you do with accounts receivable financing funds? The options are almost limitless and can include:

  • payroll
  • operating expenses
  • expansion
  • pay-off bills
  • obtain bulk discounts

Enjoy the freedom of letting your customer’s credit finance your seasonal inventory or new growth opportunities when you sell your accounts receivable to LaGray Finance.

Begin The Adventure Today

Our programs for accounts receivable financing and factoring are easy and efficient, with a fast application and approval process. LaGray Finance Associates will work with you to determine what type of accounts receivable financing is best for your business. Our specialists are here to answer your questions and give you a no-obligation application today