Business is similar to war. If you don’t have the resources to fight battles, you’ll lose. Resources in business ultimately equates to money. Most businesses understand the eight major ways to raise working capital, namely, accounts receivable financing, bridge loans, capital equipment loans, common stock, convertible debt, leases, preferred stock, and venture debt. In this series we’ll look at the advantages of business financing over other financing options.
Accounts Receivable Financing vs. Business Finance
Companies in need of quick cash sometimes consider accounts receivables especially if they have a multitude of unpaid invoices. This strategies involves selling off outstanding receivables to finance or factoring organizations at discounted prices. In essence, your business makes a quick profit off of owed income. Companies that offer this service often refer to it as accounts receivable factoring. Usually the more current the debt you are selling is the higher the amount your business can receive for it. As the company acquires the receivables your organization gets paid. However, they often charge fees that in short term seem great but over time can significantly exceed the costs of business financing.
A business finance lease has the distinct advantage over accounts receivable financing in that the required funding is immediate. Instead of paying for a company to get the money you are owed and waiting to see if it works, your business can secure the working capital you need to move forward instantly.
Obviously, according to the specific situation your business is facing it is always best to consider all options available. Our next blog will discuss the advantages of leasing over bridge loans.
If you have questions or would like to inquire about applying for any sort of financing, give STRADA Capital a call. We are versatile an offer construction equipment leasing, truck leasing, equipment leasing, working capital, and business finance options. You can also fill out a quick application to get your business the resources it needs to stay competitive.