Business owners are always looking for funding solutions that give them more control. Traditional lending channels offer a narrow selection with limits on the amounts of capital they can provide to businesses. By financing receivables, businesses are able to create a reliable source of working capital and retain control over their finances.
The Traditional Lending Landscape is Uncertain
Despite a strong economy, business owners are very wary of taking out traditional loans for working capital. In addition to the often lengthy loan approval process and limited amounts of capital available, the future of traditional loans is uncertain and risky. Over the course of this year alone, businesses have seen multiple interest rate hikes on loans, and more are being lined up for 2019. Rising interest rates make it much more difficult for business owners to pay off liabilities, so debt-based financing is something entrepreneurs try to avoid.
Financing receivables provides the capital businesses need while simultaneously reducing the reliance on traditional loans. Financing receivables through factoring services, for instance, gives businesses immediate access to capital by converting unpaid invoices to cash. Instead of waiting a month or longer for customers to receive revenue, businesses using accounts receivable financing can boost cash flow and quickly accumulate working capital without taking on unnecessary debt.
Financing Receivables with a Line of Credit
Because receivables are assets owned by a business, they can be used to create a revolving line of credit to provide a renewable source of capital without placing any debt on the books. Asset-based lines of credit are one of the few financing solutions that actually promote growth. As a business sees an increase in sales and receivables, the amount of financing available through the line of credit will also increase. Businesses can take advantage of growth opportunities with asset-based lines of credit without taking out term loans, jeopardizing their credit ratings, or leaving themselves open to arbitrary interest rate hikes.
At Derix Capital Finance, we offer the most comprehensive programs for financing receivables. Whether you are looking to improve your cash flow or create a revolving line of credit, we can help. Contact our offices today to learn more about how financing receivables can ensure long-term success for your business.