Accounts Receivable Financing Blog

What’s the Difference Between A/R Financing and a Bank Loan?

June 11, 2024

In the world of business financing, there are various options available to address cash flow needs and fund growth opportunities. Two common solutions are Accounts Recievable (A/R) Financing and traditional bank lines of credit. While both serve the purpose of providing capital, they operate differently and cater to distinct needs. Let's explore the key differences between A/R financing and bank lines of credit to help you make informed financial decisions for your business. 1: Cash Flow, Collateral, and Creditworthiness: • Bank: Traditional bank lines of credit are based on things like past business performance, typically require collateral and a strong credit

The Ultimate Guide to Invoice Factoring with SouthStar Capital

May 24, 2024

Invoice Factoring is a financial transaction that allows businesses to convert outstanding invoices into immediate cash. At SouthStar Capital, we make the process straightforward and beneficial for your business. Here's a step-by-step guide to our invoice factoring process: Step 1: Your Company Provides a Product/Service The first step in the invoice factoring process begins with your company providing a product or service to your customer. This could be anything from manufacturing goods, offering consulting services, or delivering any other value your business specializes in. The key is that this transaction creates a valid, collectible invoice. Example: You own a manufacturing

AR Finance Case Study

January 28, 2020

American Staffing, Inc. Case Study This case study shows how Accounts Receivable Financing can be used to solve the cash flow issues of a staffing company, highlighting the receivable financing problems and solutions process. To protect client privacy, we have changed some details (including their name) in this business case. Also, the numbers have been simplified to make the case study easy to understand, but the key facts and lessons remain. The Challenge American Staffing, Inc. (ASI) is a staffing company that matches large corporate clients with qualified candidates to fill open positions within the corporation. Although ASI is a

10 Questions: Is Accounts Receivable Financing right for your business?

September 10, 2019

When considering if Accounts Receivable Financing is the right solution for obtaining working capital for your business, ask yourself these 10 questions: Could you increase sales with more working capital? Do you have to scramble at the end of the week or month to cover your payroll expenses? Is your business in growth mode? Have you been turned down by a bank for financing? Do you have projects that you could be bidding if you were assured the cash flow required would be available to you? Do you have challenged financial history or personal credit issues? Do the majority of

The Cost of Invoice Financing

February 4, 2019

Have you ever considered invoice financing, but thought the cost would be prohibitive? Well, maybe the question should be what is the cost of not financing your invoices? If you're turning down a large job or contract because you don't have enough working capital, think about the associated revenue your business is missing out on. Consider not just the lost opportunity cost, but also the growth opportunities your business is missing due to a lack of cash flow. With invoice financing, we advance up to 90% of your outstanding invoices, so you get the capital you need right when you

5 Reasons to use Invoice Financing to Grow your Business

June 28, 2018

The 5 reasons to grow your business with Invoice Financing. ① Easier Qualification Qualifying for a bank loan can be strenuous and time consuming, especially if you have a challenged credit history. Invoice Financing is different, in that the qualification process is based on your customers’ credit, not your own. ② Get Paid Faster Why should you have to wait 30, 60, or even 90 days to get paid by your customers? Invoice Financing allows you to unlock the cash within your business immediately, making it easier to grow your business. ③ Add Flexibility Invoice Financing is a means of

Don’t be Fooled by Online Lenders

June 27, 2017

A Safer Option than Online Lenders. We know that business owners can get in a pinch financially and feel they need to resort to online lenders for fast cash. Many of these online lenders, such as a Merchant Cash Advance (MCA), offer quick funding with little paperwork, but this decision can have long term effects on your finances. These online lending structures may be based on your business's future sales, making it a higher risk funding option with a greater liability on your balance sheet. Many of these online options also have very high interest rates, forcing you into a

Why Invoice Financing may be better than a Business Loan

January 9, 2017

Invoice Financing may be better for your company than a Business Loan. According to The Service Corps of Retired Executives (SCORE), 82% of start-ups and small businesses fail because owners have a poor understanding of cash-flow management and lack the ability to access working capital needed for growth. One funding option that is often overlooked is invoice financing. This alternative lending method does not have the same strenuous requirement process as a traditional business loan. The main qualification is that a company has customers with outstanding invoices that are paid on terms. Below, we will take a look at why

Does Making Payroll Stress You Out?

December 2, 2016

Payroll Funding may be the answer. What is Payroll Funding? Funding payroll can be a challenge without a constant source of cash flow. Even if your customers pay within 30 days, your employees likely need to be paid sooner. If your customers have longer payment terms of 45, 60, or even 90 days, Payroll Funding may be a necessity for paying your employees on time. How does Payroll Funding work? Slow paying customers, rapid growth periods, seasonal patterns, selling on credit terms, and other factors can create cash flow challenges for your business. With Payroll Funding, rather than waiting for

Your Business May Be at Risk of Growing to Death

October 26, 2016

Growth is usually viewed as a positive step for business owners, but if not managed properly, growth could be the death of your business. If your business grows too fast, or grows the wrong way, you can actually grow yourself out of business. Along with growth comes the costs of additional staff, system development, and changes in operations. Without access to working capital, your business won't be able to support these essential changes. By tapping into your business's Accounts Receivable, or outstanding invoices, you can free up existing capital and have access to the immediate cash flow needed for growth.