Accounts Receivable Loan – The right choice for your business

The terminology Accounts Receivable Loan is another term for factoring. It is basically the concept of exchange of finance between two different companies. One company is the wholesale company that has an immediate cash requirement and the other one is the lending company which is also known as the factoring company that provides Accounts Receivable Loan to the wholesalers.

From where did the term Accounts Receivable Loan arise?

The terminology arouse when the traditional banks did not support the wholesalers or the entrepreneurs who recently started their business and were in an urgent need of money. If a wholesaler in Detroit went to a nearest bank and tried to avail for a loan in order to expand his business, the bank asked him for a lot of paper work plus most of the times the conditions were not met and the bank refused to offer them the loan in order to avoid the risk.

The risk here was that whether the wholesaler would be able to return the money to the bank or not? What if the wholesaler’s business goes into loss and he is not in a situation to give back the money?

Thus, came the evolution of the factoring companies. These companies came with a thought that how about if they start giving loan at no interest to such wholesalers. All that the wholesalers would need to do is send the pending unpaid invoices to the factoring company and in return they get approximately 70-85% of the amount. In the end, when the customers of the wholesalers will pay the invoices the rebate shall be given to the wholesalers minus a minute that the factoring companies would charge.

Some of the exceptional benefits of Accounts Receivable Loan

• ·         No interest is charged unlike the traditional banks

• ·         There is less or no paper work involved

• ·         The information that the wholesalers/entrepreneurs give is absolutely confidential

• ·         The cash flow is instant i.e. the money is provided to the wholesaler in at max 48 hours

• ·         24 hours online access support

• ·         The fee of the loan provided is just 1-2% of the unpaid invoice

• ·         Wholesalers can easily expand their business after getting the cash from the factoring companies

With so many amazing benefits, the youth of today that is involved in self-business would definitely like to go for the option of Accounts Receivable Loan. After all, everybody wants to be successful in the market and gain achievement.