How To Qualify For Accounts Payable Financing

As a business owner, there are going to be times when you need cash fast to expand your facility or to take care of an emergency. There are many options available to you to get you the money that you require. However, factoring is one of the few options that you can use that avoids looking at your credit or your bank records. Here are a few steps to qualify for accounts payable financing.

The Timeliness Of Your Client’s Payments

When you partner with an organization that does accounts payable financing, they will use the invoices that you send to your customers as collateral for the money that they give you. You will receive the agreed-upon amount up front a few days after you send the bill to them. You will then be sent the remainder once it is paid minus the fee charged by the factoring company. However, this can be an issue if your client is slow at paying what they owe to you. The lender that you want to partner with will be looking for this first before they consider doing business with you. Before you apply with them, research your database to see the average time it takes for a payment to be made to you. If it is longer than the terms that you have arranged with them, set up a time to discuss the situation with them so this can improve. 

The Credit Worthiness of Your Clients

One of the advantages of working with an accounts payable lender is that they will provide funding to you while avoiding your credit. However, they will look into the rate of your clients before making a decision. Evaluate your records to determine how many of your customers are slow to pay their invoices. You should also look at the general time frame it takes the bills you issue to be paid. This will be data that your factoring company will request as they consider your application. If you find that a great deal of the businesses that you work with go over the net period that you require payment in, you may want to collaborate with them and fix the issue before working with the financial institution you are interested in. You should also ensure that your customers are free of any legal obligation to other lenders, such as bankruptcy. This can be a significant reason that your inquiry for assistance will be denied. 


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