3 Great Uses for Accounts Receivable Financing

If you run a business that relies on invoice billing, you know how unpredictable customer payments can be. This is especially true if you are on invoice-plus systems designed for the customer’s convenience. When you need capital, accounts receivable financing is often the logical choice because it gives you an advance on payments owed instead of a new debt line to service. Some business owners wonder what they can do with AR financing, so here are a few use cases to help jolt your imagination.

1. Acquire New Tools and Equipment

Most businesses finance major equipment purchases with loans that stretch for years, but those big machines are not the only ones you need. From office equipment with short usable lives to hand tools for manufacturing, it’s not that uncommon to find the budget is short for those small purchases just when you need them. Tapping into the money you are currently owed on completed work can get you the capital you need to make those purchases and dive into your next work order.

2. Finance Costs for Rush Orders

Sometimes you have to turn down orders because customers just ask for too much in too short a timeframe, and your operation doesn’t have the supplies or budget to take on a project of that scale. That would be true if you couldn’t use accounts receivable financing, but when you can tap into the majority of the money you’re owed, it’s a lot easier to get your people started on those big, short-notice orders. That means you can grow faster and avoid sending large customers to other shops.

Since the money you get from financing invoices is a cash advance, there are no strings attached to its use. You can cover costs like overtime as easily as raw materials or additional shipping supplies. Just put that cash where you need it to build your business.

3. Iron Out Cash Flow Issues

If you find that your customers pay unpredictably so often that it is affecting your ability to make payments on your own overhead, it’s time to think radically. AR financing gives you the opportunity to dictate your own pay dates while outsourcing a lot of the work associated with collecting invoices. The result is a streamlined operation on your end, with less financial stress and more time to spend focused on your core operations. Just evening out this process can be enough to start delivering results when it comes to your growth.


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