Accounts Receivable Financing

The holiday spending season is over, consumers’ credit card bills are rolling in, and your customers are tightening their purse strings instead of buying from your business. Do you need to boost your business bank balance? Accounts receivable financing can help.

Business Seasonality

Winter is frequently a slow season for small businesses for a host of reasons. Customers’ New Year’s resolutions to eat out less often, exercise more, and save money instead of spend it can wreak havoc on your sales. Bad weather often keeps customers inside instead of out shopping or dining. Even if you sell B2B, many client companies are slow to get rolling on new budgets and initiatives at the start of a new year, which can delay payment of your invoices.

If you own a business, such as a retail store, that traditionally does most of its business during the holiday shopping season, you know to expect this seasonal slump and have put money aside to handle it. But if you’re not prepared—for instance, if a blizzard shuts down the city and wipes out a week of sales for your restaurant, or unseasonably warm weather leaves racks of winter coats hanging unsold in your store—the winter downturn could put a big dent in your budget. That’s where accounts receivable financing comes in.

What is Accounts Receivable Financing?

Also known as invoice financing, accounts receivable financing advances your business money based on the amount of your outstanding invoices. Although accounts receivable financing is sometimes compared to factoring, there are a couple of important differences.

  • With factoring, you only receive a percentage of the value of your outstanding invoices. When you finance invoices through Fundbox, however, you receive 100% of the value of your invoices.
  • Factoring companies will take over collecting on the invoices for you. That might seem like a good idea at first glance, but it can cause problems if customers get confused about why another company is calling them. They may think it’s a scam or be concerned that your company is in financial trouble. With Fundbox, you remain in charge of collections, so your customers never have to know that you borrowed money.

Accounts receivable financing offers a flexible solution when your cash flow falls a little short. With Fundbox, you can choose how many invoices you want to finance, whether it’s just one invoice or as many as you want. You can even finance invoices for as little as $100.

What if a February sales slump takes you by surprise? Getting financing such as a business loan can take weeks or even months, but you need the money right now. Fundbox invoice financing is an ideal solution because signing up is fast and easy.

Just register your free account and connect it to your accounting software. Once you’re approved, you can view your outstanding invoices right in the Fundbox dashboard and select the ones you want to finance. Depending on your bank, the money may be in your account in as little as one business day.

Plan Ahead

Once you’ve obtained the money you need, take steps to keep your business in the black. Did your staff’s attitude contribute to your sales slump? Try these ideas for motivating your employees despite the winter doldrums.

It’s also important to plan future spending carefully. For example, make sure you know how much any financing method will cost. The last thing you need when you’re already suffering a cash flow shortage is to get hit with unexpected fees. When you use Fundbox, you’ll always know exactly what fees you’ll owe before you ever decide to finance an invoice. You can also repay the advance early if you choose to—without worrying about additional charges. Unlike many financing sources, Fundbox doesn’t impose extra fees for early repayment.

Finally, take steps to attract new customers so you don’t suffer a sales slowdown again. Learn how an advance on invoices can help you get customers in the door.

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Did you know? If you own a business, you may qualify for Fundbox Credit™ up to $100,000. Sign Up Now and if approved, draw funds to your bank account by tomorrow.
Rieva is a small-business contributor for Fundbox and CEO of GrowBiz Media, a media company focusing on small business and entrepreneurship. She has spent 30+ years covering, consulting, and speaking to small businesses owners and entrepreneurs.