Accounts Receivable Financing
Leveraging Outstanding Invoices to Access Immediate Capital.
Accounts Receivable Financing
Accounts receivable financing, also known as invoice financing or factoring, is a line of credit loan that allows businesses to convert their outstanding invoices into immediate cash. In this process, a business sells its unpaid invoices to a third-party financial institution at a discount.
The lender then advances a significant portion of the invoice value to the business upfront, typically around 70-90%. Once the customer pays the invoice, the lender deducts their fee and remits the remaining balance to the business.
Benefits of Accounts Receivable Financing
This form of financing is beneficial for companies facing cash flow challenges or whose receivables take a long time to be collected, enabling them to accelerate their cash inflow and meet immediate financial obligations.
How Accounts Receivable Financing Can Work for Your Business
Accounts Receivable Financing is particularly advantageous for a business whose vendors typically require payment sooner than the business collects on invoices.
Having a strong customer base and consistent invoicing is key for this type of financing, allowing companies to maintain a steady cash flow for ongoing operations and growth through the value of their existing accounts receivable.
Here’s where we can help:
Your Deal Source can be a valuable resource in helping prepare documentation and find the right lender to ensure a higher degree of success in securing the best loan for your business.
How do we get started?
Contact a YDS expert for a short no obligation free consultation call.
YDS will help you think through your options and introduce you to the best lending options for your company’s needs.
YDS can help you find Subject Matter Experts to help prepare you for the capital infusion, as well as improve your appeal to potential lenders.
YDS is there to support you through the application as you deal directly with lenders to apply and secure financing.
FAQ
Which lender will I be working with?
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It depends on a number of factors, such as the financial condition of your company, dollar amount needed and type of collateral used.
How much money can my company borrow?
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We have lenders that provide financing from a hundred thousand to ten million dollars.
What is the process to get a loan?
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During your initial consultation or when you fill in the required documents, your company's needs are outlined.
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YDS will help you determine which lender, what structure and a range of dollars you can qualify for.
What will happen to the fees I pay if I get turned down by the YDS lenders?
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In order to avoid surprises, we recommend working with our consultants and experts before you apply for a loan. Our vetted consultants can spot trouble and help you improve your chances of getting approved.
How are the lenders determining if I qualify for a loan?
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Lenders go through an extensive process of verifying the value of collateral, borrowers ability to repay the loans and owners background. Sometimes the lenders hire external experts to conduct appraisals or review documents.
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The lender will also look at the economic conditions and their internal process to make a final determination.
Are there any costs associated with this process?
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Use of external experts, like an appraiser or an attorney, are necessary to complete many transactions. Those professionals do charge fees for supporting the funding transactions. Those costs are disclosed upfront and can be controlled by the borrower.
What documents am I going to have to provide?
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To get funding, lenders require a certain set of documents. In general, all lenders ask for
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2 or 3 years of business income tax returns
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2 or 3 years of internal financial statements such as balance sheet, income statement and cash flow statements.
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Information about the business owners
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Information about the collateral provided
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Information about the use of capital
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Forecast for the next 2 years.
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Each lender and each borrower is unique and so a company specific document set may vary.
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We’ve created a data room where standard required documents can be stored ahead of time. We recommend that you prepare all required documents in advance. These documents are yours and only you can make them available to anyone else.